Health-Care Reform, Stimulus Funds Will Benefit Health IT

Electronic health records, streamlined processes should result.

by , / February 28, 2010
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Over the next five to seven years, major federal health-care initiatives will offer new and significant industry direction and funding for health IT investment.

The American Recovery and Reinvestment Act will pump billions of dollars into health IT through the act's Health Information Technology for Electronic and Clinical Health (HITECH) provisions. These provisions offer an estimated $2 billion in seed funding and $45 billion in incentives for the "meaningful use" of electronic health records (EHRs), as defined in recent regulations proposed by the U.S. Department of Health and Human Services, payable through the Centers for Medicare and Medicaid Services (CMS).

At the same time, major health-reform legislation at the federal level relies on health IT to implement payment reforms, new capabilities and cost savings. Although many aspects of the reform debate and federal regulations for health IT adoption remain unresolved, there seems to be one issue that all participants and policymakers -- from government to employers, health plans, providers and consumers -- tend to agree on: Health IT is a foundational and essential element of health-care reform.

Historic Opportunity

Guided by this new federal policy push and its associated funding, health IT investment over the next few years will likely have three main focal points:

  • Health-care providers will use federal impetus and funding to move their business plans and agendas forward. Recovery Act funds are significant, but only available for a short time and will have the desired effect of getting the private sector to begin moving toward adopting health IT.
  • Federal agencies will look to use broader IT capabilities in health care to streamline processing and payment of benefits -- and to track the nation's health and improve health outcomes through programs and policy. 
  • States and territories will provide an important multiplier effect for federal efforts and a critical concentration point for providers seeking assistance and connection to federal efforts.

States Must Act Quickly

Providers, the federal government and the states are coming together, in many cases for the first time, as a result of health IT efforts -- specifically about health information exchange (HIE). The federal Office of the National Coordinator for Health Information Technology issued a request for proposals in August 2009 for states, territories and nonprofit organizations to participate in the State Health Information Exchange Cooperative Agreement Program. All eligible states and territories applied for funds in October 2009 and received preliminary budget determinations ranging from approximately $4 million to $40 million in federal funds over the next four federal fiscal years (through October 2013).

States will use these funds to plan and implement exchange capabilities designed to enable EHR systems in provider organizations, and state and federal agencies, so they are interoperable and share data for specific purposes. HIE funds are essentially a down payment on providers earning their portion of the larger CMS incentives. In fact, HIE funding represents the first small wave of health IT investment that's expected over the coming years -- to be followed by a larger investment in EHRs and, finally, an even larger wave of investment in a fully wired and reformed health economy that would be capable of providing population health analysis, management and decision support.

The new responsibilities require states to have high levels of organization, expertise and support, but states are currently all over the map in their plans for HIE. Some, like New York, have been investing in their own for years. Others have been planning for investment, but their plans may not be aligned with the federal guidelines detailed in the national coordinator for health IT's RFP. The majority, however, have only begun planning as a result of the RFP, and are now crafting an approach for investment, implementation and operation that takes into account the five areas of concentration directed by the national coordinator for health IT: governance, finance, technical infrastructure, business and technical operations, and legal/policy. The states are encouraged to incorporate public-private investment and representation into their plans and to "leverage existing regional and state level efforts and resources that can advance HIE," including regional health information organizations and their Medicaid Management Information Systems infrastructure.

To continue to qualify for HITECH implementation funding, states have three to eight months to complete their plans, depending on where they are in the process. They have heavy incentives to move quickly because funds are only available for four years and state-matching requirements increase annually under the federal program. In fact, there is no matching requirement in year one (the current federal fiscal year). State HIE plans must include an approach to becoming fully self-sustaining by year five.

Looking to Massachusetts and Europe for Guidance

At least one state, Massachusetts, already has a self-sustaining HIE model as a result of a public-private partnership known as the New England Healthcare Exchange Network (NEHEN), which was created in 1997. The network is funded by large and small private-sector providers in Massachusetts and Rhode Island, commercial health plans, and the Massachusetts government.

NEHEN is standards-based and includes administrative and payment processing and clinical information exchange functions, such as e-prescribing, laboratory results retrieval and sharing clinical summaries. The inclusion of administrative functionality with a demonstrable cost-saving, efficiency-oriented business case has been key to its sustainability, along with a tiered subscription fee model as its core financing mechanism. At times, NEHEN has used federal, state and private-sector grants to augment its participant-based fees, but it doesn't rely on such sources and has operated for more than 12 years by providing real business value to its stakeholders. NEHEN participants claim that the HIE has lowered their cost for some interactions anywhere from dollars to pennies per transaction.

Beyond HIE, Massachusetts also offers lessons learned for implementing state-level tools for providing affordable, universal health insurance. The Massachusetts Commonwealth Health Insurance connector is the nation's first and only example of the type of exchange or gateway for purchasing insurance that has been part of national health-care reform proposals. Massachusetts created the Connector as part of its landmark universal coverage law in 2006 and established an interactive Web site that educates consumers on state law. It also lets them browse and purchase affordable health insurance online. Coverage in Massachusetts has increased from approximately 94 to 97 percent, and the majority of commercial policies purchased through the connector have used its Web site, Many states are looking to create similar portals to expand coverage, and the connector's self-service capabilities can serve as a model for keeping educational and support costs associated with coverage expansion as low as possible.

Finally Europe may provide further lessons for the U.S. in using health IT to improve quality and outcomes for patients, while simultaneously lowering costs. Although Europe's efforts are far smaller than what will be required in the U.S., they are comparable in size to state-level efforts and often have encountered many of the same challenges and risks associated with interoperability, privacy and sustainability. In particular, efforts under way or completed in the UK, Denmark and the Netherlands represent successful, complex projects that are showing positive results.They can provide lessons for how the U.S. federal government and states can undertake HIE and health IT planning and implementation, as well as offer guidance on technical and policy issues on sensitive topics likely to be encountered along the way, such as privacy, security or patient identification.

Driving Health IT Advancement

The HIE is a critical component of achieving the widespread and meaningful use of health IT and attracting federal funding for EHRs. The federal government, through the Office of the National Coordinator for Health Information Technology, is funding HIE and EHR adoption to a much greater extent than in the past. The caveat is that states must demonstrate that the federal investment will be well managed for the benefit of patients and taxpayers.

Planning for HIE or EHR adoption may at first look daunting for states, but it is, in fact, achievable -- lessons exist in U.S. and European case studies. At this exciting time, states, health-care providers and other stakeholders in the health economy must work together in a public-private partnership to make the most of these lessons to find new ways to use health IT to improve care, lower costs and save lives.


Robert Wah Contributing Writer
Robert Wah, M.D., is the chief medical officer for Computer Science Corp. and former deputy national coordinator for health IT at the U.S. Department of Health and Human Services.
Greg DeBor Contributing Writer
Greg DeBor is a Partner at Computer Science Corp.'s Global Health Solutions Practice and manages client relationships in New England from CSC's Waltham, Mass., office.