American Recovery and Reinvestment Act of 2009 Summary

On Feb. 17, the American Recovery and Reinvestment Act was enacted. This Act contains several major health care provisions which include:

  • $87 billion in additional federal matching Medicaid funds to states (from Oct. 1, 2008 – Dec. 31, 2010);
  • Approximately $19 billion for Medicare and Medicaid health information technology incentives over five years; and
  • New health care privacy and security requirements

The American Medical Association has created a comprehensive summary of these and other major health care provisions, which is available at

In this issue, we are providing a reprint of the AMA’s summary of the health information technology provisions; a link to a summary from HIPAA expert, Chris Apgar, on the new privacy and security provisions; and links to separate AMA detailed summaries on the HIT, privacy/security and Comparative Effectiveness Research provisions.

Health Information Technology Provisions
(Reprinted with permission from the AMA)

ARRA provides substantial financial incentives ($19 billion over a specified five-year period) that will help physicians purchase and implement HIT systems. Beyond adequate financing, a key element to the widespread adoption and use of HIT is the development of uniform electronic standards that allow various HIT systems to communicate with each other. ARRA requires the Department of Health and Human Services to develop such standards by December 31, 2009. Beginning in 2011, Medicare physicians who implement and report meaningful use of electronic health records will be eligible for an initial incentive payment up to $18,000. While ARRA includes a provision that will reduce Medicare payments (starting at 1%) for physicians who do not use EHR systems, this does not take effect until 2015, and there are exceptions for significant hardship cases. Some of the details on the implementation of ARRA’s HIT incentive provisions will be worked out through the regulatory rule-making process in the coming months. The AMA and the OMA will be closely monitoring and providing input to ensure that the HIT provisions are implemented in a manner consistent with the intent of ARRA.

The following table shows how the incentives and potential reductions are expected to work from 2010-2017:

First Payment Year

First Payment Year Amount, and Subsequent Payment Amounts in Following Years

Reduction in Fee Schedule for Non-Adoption/Use


$18k, $12k, $8k, $4k, and $2k



$18k, $12k, $8k, $4k, and $2k



$15k, $12k, $8k, and $4k



$12k ,$8k, and $4k




-1% of Medicare fee schedule



-2% of Medicare fee schedule

2017 and thereafter


-3% of Medicare fee schedule

Note: Physicians in rural health professional shortage areas who adopt/use EHRs are eligible to receive a 10% increase on the incentive payment amounts described above.

Other HIT provisions of ARRA include:

  • Officially establishes the Office of the National Coordinator for Health Information Technology within HHS to promote the development of a nationwide interoperable HIT infrastructure; President Bush already created ONCHIT by Executive Order in 2004.
  • Establishes HIT Policy and Standards Committees that are comprised of public and private stakeholders (e.g., physicians) to provide recommendations on the HIT policy framework, standards, implementation specifications, and certification criteria for electronic exchange and use of health information.
  • HHS would adopt, through the rule-making process, an initial set of standards, implementation specifications, and certification criteria by December 31, 2009.
  • ONCHIT would be authorized to make available an HIT system to providers for a nominal fee.
  • Provides financial incentives through the Medicare program to encourage physicians and hospitals to adopt and use certified electronic health records in a meaningful way (as defined by the Secretary and may include reporting quality measures). Authorizes ONCHIT to provide competitive grants to states for loans to providers.
  • For eligible professionals in a rural health professional shortage area, the incentive payment amounts would be increased by 10 percent.
  • Incentives under the Medicaid program are also available for physicians, hospitals, federally-qualified health centers, rural health clinics, and other providers; however, physicians cannot take advantage of the incentive payment programs under both the Medicare and Medicaid programs. Eligible pediatricians (non-hospital based), with at least 20 percent Medicaid patient volume, could receive up to $42,500, and other physicians (non-hospital based), with at least 30 percent Medicaid patient volume, could receive up to $63,750, over a six-year period.
  • Allows HHS to increase penalties beginning in 2019, but penalties cannot exceed -5%. Exceptions would be made on a case-by-case basis for significant hardships (e.g., rural areas without sufficient Internet access).

Privacy and Security Provisions

An analysis of the new ARRA privacy and security requirements has been developed by national HIPAA expert and consultant, Chris Apgar. This analysis provides an enforcement timeline for the new privacy and security provisions as well as a detailed analysis of the new requirements, which include:

  • New privacy and security requirements for Business Associates;
  • New privacy rule requirements;
  • New security education/guidance provision requirements;
  • New privacy education/guidance provision requirements;
  • New breach notification requirements;
  • New categories of criminal activities; and
  • Increased enforcement specifications

To view this summary, click here.

Other ARRA Health Care Provisions

The AMA has also provided detailed, two-page summaries on the HIT, privacy and security, and Comparative Effectiveness Research provisions of ARRA. The links to these documents are as follows:

v2 2016