This is the relevant portion of the proposed rule from page 1905 of the proposed rule published in the Federal Register:
We seek comment as to whether EPs are using qualified EHR of the hospital in ambulatory care settings.
As noted previously, the statute provides that hospital-based EPs, ‘‘such as a pathologist, anesthesiologist, or emergency physician,’’ are those EPs that provide substantially all of their Medicare-covered professional services in a ‘‘hospital setting (whether inpatient or outpatient).’’ Because the HITECH Act does not define the term ‘‘hospital setting,’’ we looked to existing statutes and regulations that define and describe hospital settings for guidance in defining ‘‘hospital setting’’ for purposes of this proposed rule. We welcome comments on alternative approaches to interpreting the meaning of ‘‘hospital setting.’’
First, section 1861(e) of the Act defines the term a ‘‘hospital’’ to mean an institution that ‘‘is primarily engaged in providing, by or under the supervision of physicians, to inpatients (A)
diagnostic services and therapeutic services for medical diagnosis, treatment, and care of injured, disabled, or sick persons, or (B) rehabilitation services for the rehabilitation of injured, disabled, or sick persons.’’ Therefore, we propose that EPs that practice primarily in inpatient hospital settings, as referenced in section 1861(e) of the Act, be considered hospital-based EPs.
Because the parenthetical after the term ‘‘hospital setting’’ in the statutory definition of hospital-based EP specifically refers to both inpatient and outpatient hospital settings, we believe the term ‘‘hospital setting’’ should be defined to also include the outpatient setting. So although a ‘‘hospital’’ is an institution that primarily provides inpatient services, we propose to define the term ‘‘hospital setting’’ for purposes of the Medicare and Medicaid EHR incentive payment programs to also include all outpatient settings where hospital care is furnished to registered hospital outpatients. For purposes of Medicare payment and conditions of participation, it is CMS’s longstanding policy to consider as outpatient hospital settings those outpatient settings that are owned by and integrated both operationally and financially into the entity, or main provider, that owns and operates the inpatient setting. For example, we consider as outpatient hospital settings all types of outpatient care settings in the main provider, oncampus and off-campus provider-based departments (PBDs) of the hospital, and entities having provider-based status, as these entities are defined in § 413.65.
Obviously this policy would deny a huge segment of providers from participating and will actually dis-incentivize the adoption of EHR systems in affiliated physician practices. If the hospital is paying for the physicians’ EHR and no one is eligible for stimulus funds, then a hospital will be inclined to make ambulatory EHR a much lower priority. How will the costs of implementing meaningful use of certified EHR technology by hospital affiliated physician practices be recouped by hospitals? Since the hospital incentive payments are completely separate from the physician practice payments, there is little incentive for cash strapped hospitals to spend scarce capital resources on ambulatory EHR systems.