The digitization of the American health care system began earlier this year with the launch of the Health Information Technology and Economic Health (HITECH) incentive program. Eligible providers and hospitals who install certified electronic health record (EHR) systems and use them in a meaningful way will receive incentive payments from the federal government to help defray the cost of the installation. The program could cost as much as $30 billion over the next decade, fulfilling President Obama’s goal of having an electronic health record for every American by 2014.

As is typically the case with government programs of this scope and magnitude, HITECH is being implemented in stages.  Stage 1 was launched this past January. Stage 2 is set to follow in 2013 and Stage 3 two years later.  The HIT Policy Committee, a public private advisory council created by HITECH and tasked with the defining “meaningful use”, already has draft criteria for Stage 2 which were subjected to public comment in February. Though stakeholders generally supported the proposed criteria, many eligible providers, hospitals and HIT vendors complained that the January 2013 launch date for Stage 2 was much too aggressive.

Several options for delaying Stage 2 are currently being considered by the HIT Policy Committee’s Meaningful Use work group. The first would involve carrying over the 90-day reporting period from Stage 1 into Stage 2. Since doctors and hospitals would only have to be compliant on Stage 2 criteria for 90 days during 2013, they could effectively delay implementation 9 months until October 1^st. The second option would simply push the start date for Stage 2 to January 2014.  A third alternative is to split Stage 2 criteria into two groups: those that draw upon Stage 1 HIT functionality would launch on schedule; those that require new HIT functionality would be delayed until 2014.

Don’t expect the Centers for Medicare and Medicaid Services (CMS) to immediately embrace delay. An overly aggressive deadline is a common complaint heard by regulatory agencies. The critique on Stage 2 timing was loud but not universal, with consumer advocates strongly in favor of maintaining the current timelines. Even some doctors and hospitals support the 2013 launch. This past Friday in a hearing held by the Meaningful Use work group, representatives of a small physicians group in Wisconsin and a federally qualified health center in Washington DC both voiced support for the current HITECH timeline.

While maximizing HITECH payments represents a strong incentive for doctors and hospitals to implement Stage 2 on time, there is no penalty for failing to do so. Penalties in the form of reduced payments from Medicare do not begin until 2015. In lieu of delay, CMS may decide to scale back new Stage 2 criteria, particularly those that require new HIT functionality. And from a purely political standpoint, delaying a program is usually a signal that that program is not working. Neither President Obama nor HHS Secretary Sebelius want to send that message about HITECH, particularly during an election year.

Look for CMS to adhere to the current January 2013 launch for Stage 2 in the Notice of Proposed Rulemaking tentatively scheduled for release later this year. CMS loses nothing in proposing the current timeline in the NPRM and gauging stakeholder support or opposition for delay. By that time, more data will also be available on Stage 1 participation. Short of universal hue and cry in support of delay, and data showing unusually low participation in HITECH, the January 2013 launch of Stage 2 will most likely remain in place.