by Julekha Dash Contributing Writer

Maryland Gov. Martin O’Malley will sign legislation Tuesday that provides incentives for health care organizations to implement electronic health records.

House Bill 706 allows the state to make use of federal stimulus dollars available for electronic health records and coordinate those efforts with the state’s own plan to create a state wide health information exchange.

The federal stimulus money provided $19 billion toward electronic health records. State health officials do not know how much of that money will flow to Maryland.

State and federal health officials are pushing electronic health records because they believe they will reduce medical errors and lower costs by eliminating the need for running multiple tests.

The stimulus package enables physicians to receive incentives between $44,000 and $64,000 over the next five years through Medicare and Medicaid.

It costs, on average, $50,000 for a physician practice to implement electronic health records. The incentive payments begin in 2011, and physicians who do not adopt an electronic health records will be penalized through lower Medicaid and Medicare payments starting in 2015.

In the past, the biggest obstacle in getting physicians to install an electronic health record was cost. The federal stimulus money and the state’s health information exchange overcomes that obstacle by providing incentives to adopt health records.

“It’s trying to create a business model to make [health IT] work,” Department of Health and Mental Hygiene Secretary John Colmers said.

While the federal money provides payments to physician practices, the state is taking its own steps to ensure that hospitals can share electronic information. The legislation requires the Maryland Health Care Commission and the Health Services Cost Review Commission to designate a state health information exchange by Oct. 1. State health insurers will provide incentives to hospitals, which include a lump sum payment or increased reimbursement, to adopt electronic health records.

Erickson Retirement Communities, Johns Hopkins Medicine, University of Maryland Medical System and more than a dozen companies and health care institutions have submitted their own plan to the state’s health care commission to create a health information exchange, known as the Chesapeake Regional Information System for our Patients.

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