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Medicare and Medicaid EHR Incentives
6 Months Ended
Dec. 31, 2012
Other Income [Abstract]  
MEDICARE AND MEDICAID EHR INCENTIVES
MEDICARE AND MEDICAID EHR INCENTIVES
The American Recovery and Reinvestment Act of 2009 provides for Medicare and Medicaid incentive payments beginning in calendar year 2011 for eligible hospitals and professionals that implement and achieve meaningful use of certified EHR technology. For Medicare and Medicaid EHR incentive payments prior to the quarter ended December 31, 2011, the Company originally utilized a grant accounting model to recognize these revenues. Under this accounting policy, EHR incentive payments were recognized as revenues when attestation that the EHR meaningful use criteria for the required period of time was demonstrated and were recognized ratably over the relevant cost report period to determine the amount of reimbursement.
The Company subsequently concluded that it should have applied the contingency model to account for Medicare and Medicaid EHR incentive payments beginning in its fiscal year ended June 30, 2011. Under the contingency model, EHR incentive payments are recognized when all contingencies relating to the incentive payment have been satisfied. For Medicaid EHR incentive payments, recognition occurs at the time meaningful use criteria are met and formal state acceptance is documented since Medicaid payments for the states in which the Company operates are based upon historical cost reports with no subsequent payment adjustment. For Medicare EHR incentive payments, recognition is deferred until both the Medicare federal fiscal year during which EHR meaningful use was demonstrated ends and the cost report information utilized to determine the final amount of reimbursement is known.
As a result of the retrospective application of the contingency model, previously reported net income attributable to the Company's stockholders was positively impacted by $3.6 million and $1.1 million for the three months and six months ended December 31, 2011, respectively, and net income attributable to the Company's stockholders was reduced by $1.1 million for the fiscal year ended June 30, 2011.
The Company recognized other income related to Medicare and Medicaid EHR incentives under the contingency model of $21.3 million and $14.5 million for the three months ended December 31, 2011 and 2012, respectively, and $24.4 million and $25.8 million for the six months ended December 31, 2011 and 2012, respectively. The Company incurs both capital expenditures and operating expenses in connection with the implementation of its various EHR initiatives. The amount and timing of these expenditures do not directly correlate with the timing of the Company's cash receipts or recognition of the EHR incentives as other income. As of June 30, 2012 and December 31, 2012, the Company had $2.7 million and $13.2 million in Medicaid and Medicare EHR receivables, respectively, on its condensed consolidated balance sheets. In addition, as of June 30, 2012 and December 31, 2012, the Company had $4.3 million and $7.4 million in Medicare EHR deferred revenues, respectively, on its condensed consolidated balance sheets.