Incentives and penalties in new electronic health records bill

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Higher Medicare payments would be the carrot and financial penalties would be the stick under a new electronic health records bill introduced in the U.S. House.

Early adopters of electronic health records and other health information technology tools would receive higher payments under H.R. 6898, which Ways and Means Health Subcommittee Chair Pete Stark (D-CA) introduced Monday. The bill is primarily aimed at physicians but applies to other providers as well. Penalties would be imposed on those who delay or don't adopt more modern technology.

A key portion of the bill would create a financial aid stream through matching grants to fund information technology. Its main target would be nonprofits and providers in rural, underserved or low-income areas.

Also under the proposal, private sector and government health officials would form a new advisory panel to create interoperability and security standards by 2011. It also would codify the position of health IT coordinator within the Department of Health and Human Services.

Hospitals could reap extra payments worth millions of dollars over a five-year phase-in period, while doctors meeting new standards could collect up to an additional $40,000. Providers still not moving to meet the newly proposed standards after five years would be subject to fines or other penalties, a provision missing from similar legislation introduced recently.