"Should it pass as currently written, states would receive funds to offer low-interest loans to finance implementation of health IT as well as money to distribute grants to regional health information exchanges that will enable better coordination of care." -- Sen. Richard T. Moore, NCSL vice president (pictured)

As Congress and the Obama administration hammer out a sweeping economic recovery package, states are poised to lead the way in many of the health initiatives. Aggressive growth in using health information technology or health IT is among the priorities in the stimulus package. In recent remarks, President Obama mentioned the goal of having all medical records computerized within five years.

Many states already have legislation that will advance this goal and other activity on electronic health information exchange. States have embraced health information technology as a way to reduce medical errors, improve health care quality and streamline health care.

"This economic recovery plan not only makes health information technology a priority for all states with its incentives to improve quality and contain costs, but it also creates much-needed jobs in this emerging sector of health care," said Sen. Richard T. Moore, NCSL vice president. "Should it pass as currently written, states would receive funds to offer low-interest loans to finance implementation of health IT as well as money to distribute grants to regional health information exchanges that will enable better coordination of care."

Senator Moore, a principal architect of the landmark Massachusetts health care reform effort, is co-chair of NCSL's Health Information Technology Champions (HITCh) Project and a member of the National Governor's Association's State e-Health Alliance.

A preliminary summary of the House version of the stimulus package identified four health IT priorities:

• Invest $20 billion in health information technology infrastructure, including Medicaid and Medicare incentives and state grants to encourage providers to use health IT.
• Develop standards that allow for the nationwide electronic exchange of health information.
• Generate savings through improvements in quality, care coordination, and reductions in medical errors.
• Strengthen privacy and security laws assuring that state laws are retained.

The National Conference of State Legislatures (NCSL) has developed a cadre of health IT policy experts from among its members. In this rapidly evolving arena, legislative expertise in health IT policy is essential to identify best practices for the use of state and federal money.

States have addressed three major policy concerns regarding electronic medical information:

• Privacy and Security: Many consumers fear that an electronic system will make their medical histories more vulnerable to unauthorized exposure.
• Health Information Exchange: Systems used by providers must be interoperable and consumers, payers and providers need to develop new ways to work together to share information.
• Health IT adoption issues: A significant factor in the snail's paced adoption of health IT arises from the misalignment of costs and benefits across health care stakeholders. Providers may hesitate to purchase systems because cost savings accrue mainly to others.

So, what have state governments done? Vermont created a dedicated funding stream, through a fee on all health care claims, to help fund the adoption of electronic health records by small providers. Minnesota, Nevada and Rhode Island have updated their health data privacy laws to allow for electronic exchange of health information.

In 2007, the Minnesota Legislature created a first-in-the-nation requirement for all hospitals and health care providers to have interoperable electronic health records by 2015. In 2008, Massachusetts enacted a requirement that all hospitals and community health centers have electronic health records by October 2015.

Other states have put Medicaid at the center of their efforts. At least nine state Medicaid agencies have created electronic records using Medicaid claims data, and 27 other programs have plans under way. The State Alliance for e-Health is a high-level state policy council that is looking at the entire range of financing, privacy and governance issues states are facing.