American Recovery and Reinvestment Act

Incentives for the Use of HIT in Physician Practices 

On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009 (ARRA). The Act includes over $19 billion dollars in funding and incentives for the development, adoption and upgrade of health information technology (HIT). This legislation can assist physicians in the adoption and use of HIT over the next few years. 

Medicare Incentives for Physicians

ARRA allows for cash payment incentives for each eligible physician who is a "meaningful user" of a certified EHR.  The first year that incentives will be available will be 2011. Hospital-based physicians are not eligible for incentive payments. Physicians who adopt EHR in 2015 or later will not be eligible to receive incentive payments. Physicians who are not "meaningful users" or who choose not to adopt qualified EHR technology will be subject to penalties in the form of Medicare reimbursement reductions beginning in 2015. 

Adopt in Year  Year 1 incentive Year 2 incentive Year 3 incentive Year 4 incentive Year 5 incentive   Total
2011 $18,000 $12,000 $8,000 $4,000 $2,000  $44,000
2012 $18,000 $12,000 $8,000 $4,000 $2,000  $44,000
2013 $15,000 $12,000 $8,000 $4,000      $39,000
2014 $12,000 $8,000 $4,000      $24,000
No incentive payments will be made after 2016.  

If not a "meaningful" user by: Reimbursement Reduction will be

  2015   1%      
  2016   2%

  2017   3%      
  2018   3% - 4%

  2019   3% - 5%      

Physicians who practice in federally designated health professional shortage areas (HPSA) and adopt HIT may be eligible for an additional bonus payment of 10 percent of the incentive amount. For example, an ob-gyn serving in a HPSA who begins using HIT in 2012 and who receives an $18,000 incentive payment would also receive a bonus of $1,800, for a total of $19,800.

Medicaid Incentives for Physicians

To receive incentive payments through Medicaid, at least 30% of patient volume must be attributed to patients receiving medical assistance.  The State will make payments to Medicaid providers of up to 85% of allowable costs (subject to caps) for certified EHR. The first year payment is capped at $25,000. Subsequent years are capped at $10,000. Providers cannot receive both Medicare and Medicaid incentive payments.   Unlike Medicare, Medicaid payments will not be reduced if the provider is not a "meaningful user."  Hospital-based physicians are not eligible for incentive payments.

Much of the language and the details of the ARRA are not yet adequately defined. Those details have been left to the Secretary of Health and Human Services. The current language in the Act refers to:

Meaningful user is a physician who:

  • Uses certified EHR technology including the use of electronic prescribing
  • Can electronically exchange health information to improve quality of healthcare
  • Submits information to HHS on clinical quality measures or other selected measures

Qualified EHR Technology is:

  • Includes patient demographics and clinical health information, i.e. medical history, problem lists
  • Has the capacity to provide clinical decision support to support physician order entry
  • Can capture and query information relevant to healthcare quality
  • Can exchange electronic health information with and integrate information from other sources

To read the full bill or to access information about the entire stimulus bill, go to


Anne Diamond
Senior Director


American Congress of Obstetricians and Gynecologists
409 12th Street SW, Washington, DC  20024-2188 | Mailing Address: PO Box 70620, Washington, DC 20024-9998