The Costs of Medicare HIT Mandate Noncompliance

MDNG Primary CareMarch 2009
Volume 11
Issue 3

President Obama has signed a stimulus bill that calls for eventually punishing physicians who do not "meaningfully" use a "certified" EHR system.

President Obama has signed a stimulus bill that calls for eventually punishing physicians who do not “meaningfully” use a “certified” EHR system by imposing up to a 5% Medicare payment penalty—non-compliance penalties start at 1% in 2015, increasing to 5% in 2019, at the discretion of the Secretary of HHS, if the nationwide EHR adoption rate remains below 75% ( CMS will use these penalties as a cost-cutting measure, which may force many physicians to consider withdrawing from Medicare.

To understand why this may happen, consider a physician who in 2019 bills $100,000 to Medicare and gets punished the full 5% for failing to meaningfully use a c-EHR, and compare her situation over five years to a physician who successfully uses a c-EHR, and also to a physician whose use of a c-EHR fails to qualify as “meaningful”:

The non-complying physician will lose $5,000 per year for five years, for a total loss of $25,000.

The physician who fails to comply due to a poor c-EHR installation or who ends up de-installing the system will have a slightly higher total loss:

$33,000 for the estimated up-front cost of a c-EHR (plus $1,500 each month for maintenance fees; see

$25,000 (penalty for non-compliance based on above math)


$58,000 (minimum five-year loss)

The physician who complies during the five years beginning in 2019 could end up incurring the highest losses:

$123,000 (cost of purchasing an EHR system, plus $1,500 per month for maintenance, multiplied by 60 months)

$50,000 (one-third of a full-time employee for reporting and documentation at an estimated $10,000/year for five years).

$125,000 in estimated workflow losses (say it takes an extra five minutes per encounter to capture required data. An office grossing $100,000/year in Medicare funds, at $100 per encounter, comes out to 1,000 encounters x 5 min/encounter = 5,000 minutes. That adds up to 250 “lost” 20-minute encounters, or another $25,000/year for five years.)

-$44,000 Medicare reimbursement (if physician “meaningfully uses” c-EHR successfully)


$254,000 (five-year loss)

The actual profit/loss calculation depends on the c-EHR that you end up buying. Some systems cost significantly less than the “average” cost stated above. Most vendors will promise a positive return on investment (ROI) due to perceived “efficiencies” gained by using their c-EHR systems. A minority of physicians on several discussion threads at Sermo, emrupdate, and other sites concur and state that they love their c-EHR software systems.

Only 17% of 2,758 physicians recently surveyed use the kind of EHR systems that Obama envisions for the whole nation, and just 4% use their EHR in a “meaningful way” ( The reasons that the majority of physicians continue to dislike c-EHR systems include:

1) Poor ROI; c-EHR systems are expensive, increase overall costs, and disrupt work flow.

2) c-EHR systems have not been shown to decrease errors. On the contrary, they have been shown to increase them, introducing 22 new errors in one study ( According to the US Pharmacopeia’s 5th annual study of medication errors, in 2003, computer entry errors were the 4th leading cause of errors, accounting for 13% of total medication errors; handwriting errors were the 15th leading cause, accounting for only 2.9% of reported medication errors (

3) Purchasing a CCHIT-certified EHR is associated with a 50% installation failure rate ( and an 8% deinstallation rate thereafter (

4) c-EHR systems increase quality only slightly, if at all, and secondarily lead to increased spending (;

5) Doctors generally dislike e-prescribing and CPOE (

These are turbulent times indeed for US physicians. Their ability to practice medicine is being encroached upon by government mandates based on unproven technology. I hope that physicians can make the right choices that have the least impact on their practices’ ability to survive financially.

Alberto Borges, MD, is in private practice and is an assistant clinical professor of medicine at The George Washington University School of Medicine and Health Sciences in Washington, DC. Check out his website at

The opinions expressed in this column do not necessarily reflect those of MDNG.

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