The U.S. Department of Health and Human Services (HHS) has announced a new five-year initiative that will provide higher Medicare reimbursement payments to U.S. physicians who use electronic health records (EHR).

The demonstration program is intended to offset the costs of putting EHR software into place and paying for training and support, which have been some of the primary hurdles to small and midsize practices adopting the technology.

As part of the initiative, the HHS's Centers for Medicare and Medicaid Services (CMS) next northern spring will begin working with 1,200 practices that have between three to five physicians, said HHS Secretary Mike Leavitt. The practices, which treat 3.6 million patients, will use certified EHRs to meet clinical quality standards, he added.

During the first year, practices that use certified EHRs will be given higher Medicare reimbursements, he said.

In the second year of the program, incentives will be added for those practices that use the software to compare their performance against national standards for care. During the third year, further incentives will be available to those practices that improve quality of care, Leavitt said.

Practices can receive higher financial incentives as they deepen their investment in and use of the technology, he added.

The initiative is intended to reduce very low rates of EHR adoption by small physician practices, Leavitt said. The program is also part of an effort to move the health care industry from a economic sector to an economic system like that used in banking, where standardized systems such as automated teller machine networks are shared with competitors.

The agency noted that only 10% of small physician practices use EHRs today, and only 5% of solo practitioners use the software.

"We want to learn and indeed to get better at paying for value and not just volume," Leavitt said. "This is not just about getting computers in every doctor's office. This is about creating an interoperable systems to connect providers."

Peter Embi, a physician and director of the University of Cincinnati's Center for Health Informatics, spoke during the HHS announcement about a patient of his who has severe arthritis, gout and congestive heart failure. Without the benefit of EHR software, which Embi uses, "at best his care would be slow and delayed. At worst, he might actually be harmed by some conflicting medications."

The initiative requires that participating practices use a certified EHR system to perform specific functions, including clinical documentation and ordering prescriptions, that can affect the quality of care, the HHS said.

The system used by participating practices must be certified by the HHS. The incentive payments will be based on performance on the quality measure, with an added bonus on how well the EHR is helping to manage patient care, according to the agency.

Leavitt also announced that the HHS will provide local organizations who have linked employers, health plans and providers with access to Medicare physician quality performance measurement results, probably as soon as the next summer.