"Broad adoption of EHRs has the potential to transform health care and the way medicine is practiced in our nation," said Acting CMS Administrator Kerry Weems. "Medicare has chosen the communities whose proposals will work best for this demonstration project. But other communities can still build on the outstanding work they have done and consider designing and carrying out their own incentive-based projects. In a community where health care providers and payers have already achieved significant coordination in applying for the Medicare demonstration, it may be possible to design independent incentive programs even without Medicare's participation."

Over the five-year demonstration project, financial incentives will be provided to as many as 1,200 primary care physician practices in the selected communities that use certified EHRs to improve quality as measured by their performance on specific clinical quality measures. In addition to the incentive payments, bonus payments may be awarded based on a standardized survey measuring the number of EHR functionalities a physician group has incorporated into its practice. Total payments under the demonstration for all five years may be up to $58,000 per physician or $290,000 per practice.


Findings from the demonstration will help determine the role of EHRs in delivering high-quality care and reducing errors. The demonstration will also assess the role of incentive payments in encouraging adoption and use of EHRs.

The project will be implemented in two phases. CMS will begin working with partners in four Phase I communities over the coming months to develop site-specific recruitment strategies, and recruitment of physician practices will start in the fall. For Phase II sites, these activities will begin in 2009.

The EHR demonstration project is an important step toward President Bush's goal of most Americans having a secure, interoperable electronic health record by 2014. For more information on the project, visit http://www.cms.hhs.gov/DemoProjectsEvalRpts/downloads/2008_Electronic_Health_Records_Demonstration.pdf.

This initiative is also part of HHS' bold vision for health care reform built on the four cornerstones of value-driven health care. These include: adopting interoperable health information technology; measuring and publishing quality information to enable consumers to make better decisions about their providers and treatment options; measuring and publishing price information to give consumers information they need to make decisions on purchasing health care; and promoting incentives for high-quality, efficient delivery of care.

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