In a recent article, The Advisory Board suggested that providers wait until 2012 to demonstrate achievement of meaningful use (MU).1 But waiting until 2012 may not be the right solution for every provider; in some cases, 2011 may be a better goal date.

Don’t Rush

Aside from all the complexities of Stage 2, rushing into MU compliance is a bad idea. Moving to MU requires, for most organizations, a profound number of cultural changes. Doing this well and building a foundation for more comprehensive EHR use in the future will require getting the cultural dynamics right and achieving widespread buy-in. If the provider organization rushes through this, it will likely have problems later because the cultural foundations are not firm.

Furthermore, deriving real benefits from EHR adoption requires workflow changes. Rushing into the adoption of an EHR so you can check it off your to-do list misses the fundamental objective—improving operations and outcomes. A rushed and poor implementation will need to be redone. Taking the necessary time to examine and adapt workflows is crucial to the successful use of EHRs.

If the organization has through past practices or a well-thought-out plan taken a measured and intelligent approach to EHR adoption, there is no rush. This organization is in a solid position to demonstrate achievement of MU requirements. The issue then becomes when to complete the necessary paperwork to receive the incentive payment. This is an issue of strategy and bears consideration of other factors.

If an organization is close to meeting MU requirements, the extra push provided by the end of September 2011 deadline (end of December for physicians) may be helpful. Many organizations have geared up and have momentum that may be lost if the organization shifts the target to 2012 from 2011.

Finally, for organizations that are ready, there may be some public relations benefit to being able to say that their hospital was one of the first to meet MU criteria.

No Loss of Incentives

If the provider first demonstrates MU in 2012, they will not lose total incentive payments. However, for organizations that require EHR incentive payments to fund their EHR adoption, delaying until 2012 raises some financial issues. This means that the CFO, in conjunction with the senior executive team, needs to consider alternative financing if the organization defers meeting MU until 2012.

Hospitals should bear in mind that under the Medicaid EHR incentives, they may qualify for the first-year payment for activities of adopting, implementing or upgrading (AIU). AIU does not require demonstrating MU. This may make it ideal as a means to obtain some of the expected cash flow in 2011 and allow deferral until 2012 of actually demonstrating MU.

An outside possibility that may bear some consideration is the potential for the unspent EHR incentive monies to be pulled. The Spending Reduction Act of 2011 includes provisions to rescind all unspent EHR incentive funds as part of the broader elimination of all “stimulus funding” from the American Recovery and Reinvestment Act (ARRA) of 2009.2 While this may be a low-probability outcome, delaying until 2012 risks the possibility that the funds will no longer be available.

At the end of the day, EHR incentives should not drive how or when an organization adopts an EHR. EHR incentive funds are miniscule compared to the costs that are incurred in adopting and operating an EHR, and allowing funding to drive the adoption of complex technologies and significant workflow changes is an abdication of management responsibility. Incentive funds can be a factor in the decision but should not be the only factor. For some organizations, deferring until 2013 or 2014 is the right decision, even though this may result in some loss in total Medicare EHR incentives.

Stage 2 Will Be Harder

The jockeying for the Stage 2 requirements is occurring now. There are many constituencies—some pushing for significantly higher requirements, others pushing for a more rational incremental level of requirements between Stages 1 and 2. Handicapping this race is an extremely inexact science.

If your organization is clearly ready for Stage 1, moving to Stage 1 in 2011 may be the right decision. This would provide the opportunity to look at the likely requirements for Stage 2 and start preparing for them now.

It is clear that the vast majority of requirements in Stage 1 will be required at a higher level in Stage 2 (e.g., the 30% CPOE level will move to 50% or more). Another likely change in moving to Stage 2 is that Stage 1 menu set items will move to the core set under Stage 2. An organization demonstrating Stage 1 MU in 2011 can begin to adopt all Stage 1 menu set items. What is known or highly likely provides a basis for gauging the challenge the organization will face in Stage 2. To prepare, assess how difficult it will be for your organization to meet Stage 1, other priorities occurring in 2011–2013 and what challenges may occur when adopting known and highly probable Stage 2 behaviors.

If the organization is highly risk-adverse, then delaying is likely better. If the organization wants to be a leader, is willing to take reasonable risks and sees the benefit of 2011 adoption with a clear understanding of risks and a firm plan for addressing them, then delaying may not be the best choice.

Short Time to Adopt Stage 2
Political Disaster

It is generally accepted that the Stage 2 rule will be finalized by mid-2012. To the extent that the final rule is significantly more complex than Stage 1 and introduces a plethora of new requirements, this would create a significant challenge for providers to meet Stage 2 beginning on 1 October 2012 (the start of FY 2013). This presents the Centers for Medicare and Medicaid Services (CMS) with a challenge. If the vast majority of early adopters fail to meet Stage 2, the entire EHR incentive program will be seen as a failure. This would be a major political disaster. Even the mid-2012 timeframe for the publication of final Stage 2 requirements may be optimistic given the conflicting streams that need to converge in the final rule.

Nothing in the underlying law (ARRA) requires CMS to jump to Stage 2 in 2013. Congress merely instructed the Secretary of Health and Human Services to make MU requirements more stringent over time.3 This means CMS could recognize the reality of the compressed timeframe and defer Stage 2 compliance until 2014.

Stage 1 Plus?

CMS has also hinted that when it adopts Stage 2 requirements it may boost the requirements for Stage 1—call it Stage 1 Plus.4 Depending on how CMS approaches this Stage 1 Plus, providers who deferred their demonstration of MU until 2012 may find that they also need to quickly adapt to the enhanced Stage 1 requirements. This would reduce the comfort that organizations delaying until 2012 may have. While the reality of Stage 1 Plus is unknown, organizations should consider the possibility that they will need to meet Stage 1 Plus shortly after reaching Stage 1.

Vendor Contracts and Commitments

Whether a provider demonstrates MU in 2011 or in 2012, they need to carefully review their existing vendor contracts for promised timing for delivery of updated applications code that meets new MU requirements. The contracts may not adequately address the expected scenario of the short window for meeting Stage 2. The time to address such a deficiency is now, not once the crisis is upon the organization.

Furthermore, all providers need to obtain quarterly status updates on their vendors’ application development efforts with respect to MU. The vendors should be handicapping likely changes needed in their applications based upon the discussions of healthcare information technology (HIT) advisory committees and identify the extent of changes needed. Some of the likely requirements of Stage 2 may be more complex for some vendors than others due to the nature of their application and their software development approach. Understanding the challenges faced by key vendors is critical to a provider’s risk mitigation.

Other Projects

The work to move from Stage 1 to Stage 2 will not be executed in a vacuum. Hospitals and physician practices are dynamic places with many initiatives underway simultaneously. For example, a hospital with a major new facility opening may want to move to MU before the information systems freeze that would precede the new facility opening. Others may wish to defer it until after the opening, adopting new workflows as part of moving into the new facility. At the same time, ICD-10 implementation, with a deadline of 1 October 2013, is a major effort for all organizations. Deferring Stage 1 MU until 2012 would put the move to Stage 2 on top of the final push on ICD-10, and it is unlikely that the ICD-10 deadline will be moved.

Balancing all initiatives and resource requirements is complex and rarely has an ideal answer. The timing for Stage 1 compliance should be made within the context of other major initiatives.


Deciding when to demonstrate MU is not an easy choice. In making the decision, many factors come into play, including the organization’s readiness, other initiatives, risk posture, vendor readiness, culture, and expected CMS MU requirements and timing. Whatever decision is made needs to consider all known information and should also include any necessary risk-mitigation efforts and, where appropriate, alternative plans.

Given the uncertainty, many providers will defer until 2012. However, this decision is not without its own risks and may require action today to address the loss of momentum, cultural issues and potential for rescission of EHR incentive program funding.

More important than the incentive payments themselves is the need to assure that the large investment being made in the EHR maximizes the benefits achieved in terms of operating efficiencies, patient safety and quality. Achieving these benefits requires consideration of EHR implementation and corresponding workflow changes.


1 Protima Advani, “Not So Fast—Why It Pays to Wait until FY 2012 on Meaningful Use,” iHealthBeat, California HealthCare Foundation, 3 March 2011, available at (last accessed 13 March 2011).

2 Spending Reduction Act of 2011, H.R. 408, available at (last accessed 13 March 2011). See SEC. 301. RESCISSION OF UNOBLIGATED STIMULUS FUNDS and SEC. 302. REPEAL OF CERTAIN STIMULUS PROVISIONS.

3 42 USC 1395ww(n)(3)(A), “The Secretary shall seek to improve the use of electronic health records and health care quality over time by requiring more stringent measures of meaningful use selected under this paragraph.”

4 Establishment of the Permanent Certification Program for Health Information Technology, 76 Fed. Reg. 1262, 1303 (7 January 2011).

17 March 2011