EHR Contracts Done Right: Get the most out of the government’s new adoption incentives

Need an incentive to implement an electronic health records (EHR) system in your practice? How about $44,000? That’s the amount the federal government is making available to eligible physicians as part of its effort to speed up the adoption of health information technology throughout the U.S. In fact, under the Health Information Technology for Economic and Clinical Health Act (HITECH Act), part of the American Recovery and Reinvestment Act of 2009, billions of federal stimulus dollars are flowing to medical practices throughout the U.S. to help physicians set up EHR systems.

The best strategy, however, is to get started as soon as possible. That’s because the government has tiered the payments so that physicians who adopt the technology will receive more of an incentive payment than later adopters. Another reason to hurry: Not only will incentive payments be unavailable beginning in 2015, but also starting that year, the government will actually impose a penalty on physicians who have not adopted an EHR system.

Do Your Research

Once you’ve decided to transition to an EHR system, you should prepare and research before purchasing a system. First, you should identify your practice’s needs so that those needs can be incorporated into the EHR system you ultimately select. Speak with physicians in your specialty who have already adopted EHRs about what they like and dislike about their systems. Complete a workflow assessment of how your practice uses paper medical charts. While you want to understand how your paper medical chart process works, you do not necessarily want your EHR system to electronically replicate your paper system.

Second, evaluate the various EHR systems on the market, shop EHR vendors and establish a timeline for implementation. There are hundreds of vendors offering EHR systems, each advertising itself as the perfect fit for your practice.

Create a “pros and cons” chart and compare EHR systems using the following criteria: design, access, interface, implementation, use updates, testing, cost, security, data ownership and warranties. Create another chart to compare the EHR vendors using criteria like reputation, viability of the company and presence of the company in your specialty. After, establish a realistic timeline for the implementation of your EHR system.

Negotiate a Contract

Now that you have outlined your practice’s EHR needs and researched the various EHR systems and vendors, it is time to negotiate your EHR contract. Below are some key provisions:

• EHR Product Description: The contract should identify, in detail, the goods and services you are purchasing. Your expectations for the system should be memorialized in writing. For example, what do you expect to view on the EHR screen when you retrieve a patient’s chart? Will you be able to transmit prescriptions electronically?
• Equipment and License: Transitioning to EHR involves the purchase of a license to use the vendor’s EHR software and equipment. The contract should identify who is providing the equipment because this has implications, like software compatibility and security, throughout the contract. Additionally, the contract should identify the type of license you are purchasing. How many computers can the software be installed on? If you have more than one practice site, can the software be installed and used at multiple office locations? Is the license transferable or assignable if you sell your practice? None of these questions should be left to chance.
• Installation, Implementation and Testing: The contract should describe critical milestones that the EHR system must meet. You should tie the purchase price payments to the completion of these milestones. The contract should also address the vendor’s training, education and testing responsibilities, answering questions such as: How many hours of training are included in the purchase price? How much will extra training sessions cost? Who will be trained? Where will the training be conducted? How frequently will the EHR system be tested? What happens, who pays for it and how much will it cost if testing reveals a problem?
• Support and Maintenance: EHR systems require maintenance and sometimes require repair. If you have selected a national EHR vendor, you should inquire about local service providers who provide onsite support and maintenance. You should also ensure that the contract explains the procedure for handling a system crash.
• Representations and Warranties: As a rule of thumb, a contract with very few representations and warranties should be a red flag. At a minimum, the vendor should represent and warrant via contract that (1) the software will function and perform in accordance with the terms of the contract, (2) it will perform the services outlined in the agreement (e.g., installation, implementation, testing, support, maintenance), (3) effective security measures have been put into place to prevent breaches, (4) the EHR has not infringed and will not infringe on another’s intellectual property rights (e.g., patents, trademarks, copyrights) and (5) the system is compliant with applicable state and federal laws (e.g., HIPAA, HITECH Act).
• Price and Payments: Along with the license and service fees, the “what if” charges like troubleshooting support, system upgrades and other service rates should be clearly stated in the contract. If the purchase price is in installments, you should ensure that a missed or late payment will not automatically suspend use of or access to the EHR system.
• Term and Termination: The contract will likely allow either party to terminate the agreement “at-will” or “without cause” by providing prior written notice to the other party. Absent “at-will” termination, however, the vendor’s right of termination should only be triggered by a few scenarios. Because your main responsibility under the contract is payment, non-payment after a reasonable and stated period of time is a reasonable ground for the vendor to terminate the contract. Your right to terminate the contract should be triggered by multiple scenarios because the vendor has many more responsibilities under the contract than you do. For example, does the contract allow you to terminate if the vendor fails to provide software upgrades or the system is no longer legally compliant in light of a new state or federal regulation?
• Security: You want to ensure that the EHR system is compliant with federal and state security breach and patient privacy laws. Under HIPAA and the HITECH Act, for example, health care providers are responsible for compliance and are liable for security breaches. Therefore, it is imperative that the vendor has proper security measures in place to prevent unauthorized access.

Acknowledging your practice’s EHR needs, researching the various EHR systems and vendors and negotiating the contract is a time-consuming process. You do not need to do it all on your own, however. Legal counselors, EHR consultants and technology advisors can help guide you through this new electronic path.