Meaningful Use Stage Two – The Grim Reaper for Small E.H.R. Companies

Meaningful Use of Electronic Records, Stage 2 standards are set by the Office of the National Coordinator (ONC), on behalf of the U.S. Health and Human Services department (HHS).  Meaningful Use grew out of the American Recovery and Reinvestment Act (ARRA) and the HITECH Act which provides stimulus dollars for use of electronic health records.  Many simply refer to the Meaningful Use (MU) Stage 2 requirements as “2014 Edition” requirements for certification.

Over $19 billion in stimulus funds have been paid out to date.  The stimulus created a temporary, artificial ecosystem for electronic health record software companies to grow and flourish.  Meaningful Use Stage 1 was achieved by most of the over 350 companies we track in the healthcare IT E.H.R. market.

MU2 is More Complex and Expensive

Meaningful Use Stage 2 adds some new, highly complex requirements including:

  • Secure provider to provider communications using the DIRECT protocol
  • SNOMED data standardization along with LOINC and RxNorm data
  • Clinical quality measures (CQMs)
  • Enhanced clinical decision support (CDS) that automatically integrates with E.H.R. templates
  • Consolidated-Clinical Document Architecture (C-CDA) for Meaningful Use

For many Electronic Medical Records companies, these and other requirements are so expensive and complex that they are struggling to meet the regulatory deadlines.

Deadline of Death

These deadlines have serious consequences for both the E.H.R. company and their users, (aka Eligible Providers, or E.P.s).

Regulatory Deadlines for Meaningful Use Stage 2 require the following:

  1. That any health care provider who is attesting for Meaningful Use  during 2014 must use a 2014 edition certified E.H.R.   This means that if a provider is attempting to do their attestation for Meaningful Use Stage 1 they must still
    1. ONLY be using a 2014 edition (MU2) certified E.H.R.
  2. E.H.R. companies must ensure they are certified no later than June 30th 2014 so that their clients can use a 2014 edition certified E.H.R. to start their attestation by July 1st 2014 if they are a new Meaningful User.
  3. E.H.R. companies must achieve certification not later than September 30, 2014 to ensure that their clients (E.P.s) may use the E.H.R for certifications starting with an October 1, 2014 reporting period if they are not new meaningful users.

These certification deadlines are challenging because:

  1. ONC Authorized Testing and Certification Bodies (ATCBs) are booked solid with testing days for existing Healthcare IT vendors who wish to certify their products.  Last minute requests for certification are being pushed into September 2014 or later which is too late for many companies.
  2. E.H.R. companies must ideally allow more than one day to enable their EPs to upgrade to the new system in order to start their attestation to meet the 90 day reporting period.
  3. There is a high failure rate of first time attempts to certify.   Re-testing may be hard if not impossible to schedule within the deadlines put forth by ONC for EPs to do their attestation on a 2014 certified E.H.R.

E.H.R. Switching Peaks in 2014, Will Nearly Stop in 2015

As a result we predict that many small E.H.R. companies will not have the resources to achieve meaningful use stage 2 and will be forced out of business, or will have to merge with a large E.H.R. who wants their customers to migrate to the acquiring company’s system.

E.H.R switching will come to a virtual halt in 2015 because the reporting period for subsequent stages of Meaningful Use will be expanded to one year.  Therefore, EPs who understand the regulations will want to switch now and or lock in their E.H.R during 2014 because switching during 2015 will be impossible if they wish to comply with the one year reporting period.

Meaningful Use Stage 2 offers important benefits to the health care industry.  It also serves as a grim reaper that will bring an end to many small E.H.R. companies because of crushing near term deadlines, complexity and expense.

M&A Activity is Accelerating

The time for a land grab in the E.H.R market is now.  Companies who wish to consolidate their market position should acquire struggling companies who may not make MU2 soon, and migrate users to a single platform before the start of 2015.  Mergers and acquisitions in this market started earlier this year with Vista Equity Partners and their acquisition of Greenway Health, a solid E.H.R that plowed a huge portion of their income back into their product to both comply with regulations and to build appealing clinical workflows for a superior customer experience.   Smaller E.H.Rs that do not comply with MU2 but that have an attractive customer base will be acquisition targets or struggle to stay in business.

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Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See and for more about the company.

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