April 14, 2015

Meaningful Use Stage 3 Proposed Rule: What it Means for Hospitals, Physicians & Health IT Developers

Arnold & Porter Advisory

With the publication of the Stage 3 Meaningful Use Proposed Rule on March 30, 20151 (Proposed Rule), the Centers for Medicare and Medicaid Services (CMS) propose new measures focused on promoting care coordination, improving patient access to health information and self-management tools, increasing the use of clinical decision support tools and computerized order entry systems, and facilitating comprehensive, interoperable patient data sharing among providers.  CMS intends to streamline the meaningful use requirements by requiring all eligible professionals (EPs), eligible hospitals and critical access hospitals (CAHs) to meet a single set of meaningful use objectives and measures by 2018.  CMS has raised the bar and imposes highlighted requirements, many of which will require providers to expand and modify their existing electronic health records (EHR) technology to meet these new proposed targets by 2018.  EPs, eligible hospitals and CAHs who fail to meet the proposed Stage 3 requirements face payment reductions up to 5 percent.  The proposed Stage 3 requirement also has implications for Health IT developers who are developing and marketing EHRs to EPs, eligible hospitals and CAHs.

Meaningful Use is No Longer Just an EHR Incentive Program, It is a Payment Reduction Program

While the American Recovery and Reinvestment Act of 2009 (P.L. 111-5) initially authorized CMS to provide incentive payments to EPs and hospitals participating in Medicare and Medicaid programs that adopt and meaningfully use certified EHR technology, the Act also mandated payment reductions for EPs, hospitals, and CAHs that were not meaningful users of certified electronic health record technology (CEHRT) under the Medicare program.  EPs who were not meaningful users faced Medicare payment adjustments of up to two percent starting on January 1, 2015; and eligible hospitals and CAHs who were not meaningful users faced Medicare payment adjustments of up to 25 percent of the increase to the Inpatient Prospective Payment System (IPPS) payment rate starting on October 1, 2014.

Starting in 2018, CMS proposes to require that all providers (EPs, hospitals, and CAHs) report for a full calendar year (CY), rather than the 90-day reporting period permitted in Stages 1 and 2, to avoid Medicare payment reductions.  Providers attesting under the Medicaid program still have the option of reporting a 90-day period for the first year of demonstrating meaningful use.

Stage 3 - The Last Stop on the Meaningful Use Track

Today, providers are complying with different stages of meaningful use.  Each stage (Stage 1 and Stage 2) has its own set of requirements that must be met in order to demonstrate meaningful use.  The requirements become more rigorous as EPs and eligible hospitals proceed through the stages.2   

Stage 3 is expected to be the final stage when the regulation is finalized.3  According to the Proposed Rule, all providers4 will use Stage 3 meaningful use requirements starting in 2018, regardless of their previous stage of participation.  Providers have the option to begin attesting under Stage 3 in 2017. 

Certain significant proposals include:

·        The "menu set" objectives are replaced in Stage 3 by a single set of eight objectives with measures tailored to EPs or eligible hospitals and CAHs. 

  • All the measures for Objectives 1 through 5 are required. 
  • For Objectives 6 and 7, providers are required to attest to: (1) using all three measures, and (2) successfully meeting two out of the three measures.
  • For Objective 8, EPs must attest to three of the measures numbered one through five.  Eligible hospitals and CAHs must attest to four out of the six measures.

·        All providers (EPs, eligible hospitals, and CAHs) must report for an entire calendar year their first year, rather than the 90-day first year reporting period allowed in Stages 1 and 2.  Providers attesting under the Medicaid program still have the 90-day option for their first year of reporting.

·        All providers will report and be subject to adjustment on a calendar year (CY) basis.  Previously, eligible hospitals reported based on the fiscal year (FY). 

·        Measures in Stage 1 and 2 that allowed for paper-based actions will be removed or transitioned to an electronic format utilizing EHR functionality in Stage 3. 

·        All providers will be required to use the 2015 Edition of certified EHR technology beginning in 2018.

Raising the Bar with New and Enhanced Measures in Stage 3

CMS proposes a cohesive set of eight required objectives and associated measures.  CMS aggregated many of the previous stage requirements under eight broad policy areas.  In determining which eight policy areas "represent the advanced use of EHR technology and align with the program's foundational goals and overall national health care improvement goals," CMS conferred with the Joint Health IT Policy and Standards Committee.5  The eight key policy areas/objectives are: (1) protect patient health information; (2) electronic prescribing (eRx); (3) clinical decision support (CDS); (4) computerized provider order entry (CPOE); (5) patient electronic access to health information; (6) coordination of care through patient engagement; (7) health information exchange (HIE); and (8) public health and clinical data registry reporting. 

According to CMS, over 300,000 EPs have successfully demonstrated meaningful use as of February 2015,6 and 90 percent of eligible hospitals achieved meaningful use by fiscal year 2014 at varying stages of meaningful use.7  In the Proposed Rule, CMS raises the bar by creating new measures and imposing highlighted requirements on providers, many of which will require providers to expand and modify their existing CEHRT to meet these new standards.  The Stage 3 Measures require providers to:

·        Meet significantly higher compliance rates for several measures from the Stage 2 requirements;

·        Protect electronic protected health information (ePHI) through administrative, physical, and technical safeguards and to conduct a security risk analysis of its CEHRT upon installation of CEHRT, or an upgrade to a new edition of CEHRT, and risk analysis of its CEHRT and administrative, physical, and technical safeguards on an annual basis;

·        Incorporate an electronic summary of care document that is transmitted to and received by the provider into its CEHRT;

·        Accept and incorporate patient-generated health data or data from non-clinical settings into the provider's CEHRT;

·        Create a summary of care record using CEHRT and electronically exchanging the record with other providers;

·        Expand the CPOE function to include diagnostic imaging and permit only credentialed staff to perform CPOE functions;

·        Demonstrate active engagement on public and clinical data reporting, which means the provider must be sending production data to, or in the process of moving towards sending such data to, a public health agency or clinical data registry; and

·        Provide patient access to their health information within 24 hours of the information being available to the patients' provider.

For developers, Stage 3 will require updates and revisions to existing EHR systems to address and incorporate new clinical documentation and enhanced reporting functions.  The ability to adapt EHR systems to qualify for CEHRT status will be a differentiating factor as providers evaluate and acquire new technologies.

For a detailed list of the Stage 3 proposed objectives, measures, exclusions, and significant revisions from Stages 1 and 2, please refer to our meaningful use chart.

Clinical Quality Measures Requirements Not Finalized in the Proposed Rule

EPs, eligible hospitals, and CAHs are statutorily required to report on clinical quality measures (CQMs) to CMS using CEHRT in order to be considered a "meaningful user" to avoid a payment adjustment.  In Stage 3, CMS proposes "to continue the policy of establishing certain CQM requirements that apply for both the Medicare and Medicaid EHR Incentive Programs including a common set of CQMs and the reporting periods for CQMs in the EHR Incentive Program."8  However, the proposed rule does not set forth specific Stage 3 CQM requirements.  Instead, CMS wishes to finalize requirements for the various quality programs (including the EHR Incentive Program, PQRS, and Physician Compare) at one time to allow for better alignment of the programs and increase program efficiency and efficacy.

CMS also seeks to defer rulemaking on CQM requirements for eligible hospitals and CAHs in order to align the CQM reporting requirements for the Medicare and Medicaid EHR Incentive Program with the IPPS rulemaking.


CMS is soliciting comments on a number of aspects of the Proposed Rule.  Comments are due to CMS on May 29, 2015.


*Victoria M. Wallace contributed to this article. She is a Syracuse University College of Law graduate employed at Arnold & Porter LLP.  Ms. Wallace is not admitted to the bar.

  1. 80 Fed. Reg. 16732 (Mar. 30, 2015) (to be codified at 42 C.F.R. pt. 495).

  2. The Stage 1 final rule may be found at 75 Fed. Reg. 44313 (July 28, 2010), and Stage 2 at 77 Fed. Reg. 53967 (Sept. 4, 2012).

  3. It is expected that this is the last incremental phase of the meaningful use requirements.  Further refinement and regulation may occur.

  4. This advisory uses the term "providers" to mean EPs, eligible hospitals, and CAHs consistent with the Proposed Rule.

  5. 80 Fed. Reg. at 16743.

  6. EHR Incentive Programs February 2014 Summary Report, available here, (last visited April 9, 2015).

  7. Joint Health IT Policy and Standards Committee Meeting,, available here, (Feb. 10, 2015).

  8. 80 Fed. Reg. at 16769.

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