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Federal Health-Care Reform Puts Growing Pressure on Public CIOs

Federal reform means state CIOs must consider replacing legacy Medicaid systems and building health information exchanges.

Lisa Feldner is getting a crash course in health care. The North Dakota CIO came to state government with a background in education, having served as the technology director for Bismarck Public Schools. But in the last year, she has quickly become conversant in terminologies related to electronic health record incentive programs, health information exchange (HIE) and Medicaid eligibility systems.

Because her Information Technology Department centrally manages most of the state’s computer systems, questions about the interoperability of health data often land on her desk.

“I chair the North Dakota HIE advisory committee, and when the state was required to designate a health IT coordinator, I was initially chosen,” she said. Now she talks every day with Sheldon Wolf, who was appointed the state’s health IT coordinator last April and whose office is in her department. Feldner also co-chairs the NASCIO health work group.  

With a staff of 300, the Information Technology Department is charged with addressing many of the state-level implications of the federal stimulus package’s Health Information Technology for Economic and Clinical Health (HITECH) Act and the larger Patient Protection and Affordable Care Act. “Our Insurance Department is tiny, just 30 people,” Feldner said. “It doesn’t operate any IT systems. It can’t create a health insurance exchange portal, so that will fall to us to do the IT work. It will have a huge impact on Medicaid eligibility systems, but they are relying on us to figure that out.”

Another state CIO who gets credit for paying close attention to health IT is North Carolina’s Jerry Fralick. When he delivered the keynote address for the first Health Information Technology Advocacy Day at the state General Assembly in May 2010, Fralick said he sees one of his key tasks as recommending tools that will help North Carolina manage the risks that are inherent to state health IT efforts — including ensuring that state enterprise architecture and infrastructure can support a wide-scale HIE — and to work with state agency CIOs to ensure that legacy systems critical to the HIE are robust.

A Higher Priority

Feldner and Fralick may be more involved than most state CIOs in the daily decision-making about health policy, but the topic has definitely risen on state CIOs’ radars — they ranked health care third on their list of top 10 priorities for 2011 in a recent NASCIO survey.  State and local government health IT spending is expected to increase by 19 percent by 2015, according to NASCIO.

At the federal level, beyond the more than $20 billion in provider incentives for health IT adoption, HITECH allocates approximately $2 billion in grants for other projects, including work force development, telehealth initiatives and research. State-level HIE programs will get $564 million in grant funding.

That means public CIOs must become more knowledgeable about and involved in health IT policy issues, say analysts and consultants. “It is absolutely critical that state CIOs be involved in deciding what role the state should play in governance of health information sharing,” said Mark Danis, vice president of public-sector health for IT services company Keane. “It should be part of state CIOs’ strategic planning for next year.”

The level of state CIO involvement varies from state to state depending on organizational charts. Some agency CIOs report directly to their agency head and only on a dotted line to the state CIO.

“Some state CIOs may think, ‘Thank God there is a designated health IT coordinator to worry about these issues,’” said Greg DeBor, a client partner in Computer Sciences Corp.’s (CSC) health-care practice. “But nevertheless, they have to be aware of what is going on and familiar with it, because they are going to own this stuff in the end.”

CIOs should look at how telehealth and HIE investments tie into controlling Medicaid costs, even as the programs expand, Danis said. The most critical piece is how they ensure coordination between Medicaid, the Children’s Health Insurance Program and the planned HIEs.

Medicaid operations are divided into two traditionally siloed IT systems, one for eligibility and another — the Medicaid Management Information Systems (MMIS) — to handle claims processing. Danis said Keane is starting to see RFPs for solutions in which the eligibility system must be able to share real-time data with the MMIS and an HIE. “And some states are saying the MMIS of the future must be able to reach into the eligibility system to see who’s on Medicaid and who’s not, and to make sure that Medicaid is the payer of last resort,” he added. “That is a huge challenge for state CIOs.”

Medicaid CIOs Under the Gun

If state CIOs are feeling overwhelmed by the change of pace, the CIOs of state Medicaid agencies are feeling even more anxiety. Ivan Handler, CIO of the Illinois Department of Healthcare and Family Services, thinks about the HITECH Act and health reform every day. “We have to move on eligibility and enrollment,” he said. “We have to be prepared to handle a half million new Medicaid enrollees in 2014.” Illinois’ systems that handle Medicaid, the Children’s Health Insurance Program and Child Support Services were developed in-house more than 20 years ago.

“We have to upgrade everywhere, and we are doing planning activities around that,” Handler said, “but we cannot do five to seven separate technology initiatives at once to re-create our own infrastructure. Our staffing is down, and we cannot afford to buy applications in the traditional way.”

Handler is proposing a fairly radical revision to how his agency buys and supports software. “I want to look at acquiring business services hosted in the cloud instead of procuring and running our own systems.” He’s talking to software vendors and federal officials about possibly procuring those types of services. “I am going to beat the drum and see who starts dancing.”

Handler doesn’t see how the traditional method of procurement and management of these systems can work in an era that requires rapid deployment and greater interoperability — and when state budgets are being cut.  “I know people are under a lot of pressure with deadlines and financial issues,” he said. “It may be perceived as safer to do things the same old way, but I don’t think it is safer. I think the probability of failure is higher and the cost to the state will be greater.”

In Washington state, a consolidation of health agencies is being driven at least partly by the federal health reform agenda. “One interesting fallout of all the federal activity on health IT is that interaction between state agencies has become more of a necessity now and not optional,” said Rich Campbell, director of systems and monitoring, and Medicaid CIO for the Washington State Department of Social and Health Services. His agency is merging with the state Health Care Authority, which oversees seven health-care programs, including Basic Health, a state-sponsored program that provides affordable health coverage to low-income residents.

Campbell, who will be CIO for the merged organization, said there are opportunities for savings in shared infrastructure. “We are in a good place already with MMIS,” he said. Washington recently rolled out a system compliant with the federal Medicaid Information Technology Architecture, which has a Web service-oriented framework. “It will absolutely make it easier for us to be more flexible about how we share data,” Campbell said, also noting that eligibility is still handled by a legacy system. “A year and a half ago we looked at replacement, but because of funding issues, that was put on the back burner. Now as we move toward health insurance exchange planning, it’s doubtful that [the legacy] system will support it.”

To help CIOs like Campbell, the U.S. Department of Health and Human Services plans to offer an enhanced federal matching rate of 90 percent for the design and development of new systems and 75 percent for the maintenance and operation of Medicaid eligibility systems. But even that may not be enough. “With the budget situation in Washington state, it is difficult to come up with the 10 percent,” Campbell said. “We have to fight for that. Also, we have had staffing cuts, so maintaining the expertise and bandwidth to make change is becoming more difficult. And there is so much change so fast, it is hard to absorb.”

Creating HIE portals will challenge many states. Although two, Utah and Massachusetts, already have exchanges established. CSC’s DeBor worked as an adviser on the Massachusetts Health Connector, which launched in May 2007. “It was a challenge technologically, but also because it hadn’t been done before and there were things the law was vague about,” he recalled.

Besides the Health Connector, Massachusetts created a virtual gateway enrollment for all its subsidized programs, and now 98 percent of that enrollment is done online. It also replaced its MMIS and started work on the state-level HIE. “These are major projects across four different agencies with three different CIOs, and the policies are not really established across all those boundaries,” DeBor said. “So there are tensions and questions about how coordinated the efforts are.”

Some states may take a wait-and-see approach to insurance exchanges or just allow the federal government to build something for them. “Some states just won’t have the intestinal fortitude to take this on, because they haven’t made progress on health IT, or they don’t have the people, knowledge or resources,” Keane’s Danis said, predicting that states with outdated eligibility systems will not be jumping into it. But there’s a short list of states that, regardless of which party is in power, have already made progress and will pursue their own exchanges.

Public Health Reporting

One priority of federal officials in shifting from paper to electronic health records is to improve public health reporting. Public health officials are working toward electronic reporting of immunization and lab data, as well as improved syndromic surveillance — and the pace of change is frenetic. “We can definitely feel the impact of the federal push and the acceleration in change that is happening,” said Jim Daniel, CIO of the Massachusetts Department of Public Health. “I expect as much change in the next year as we’ve had in the last several years combined.”

The Massachusetts health IT strategic plan says: “Information will be easily, securely and reliably available to better understand public health needs and trends, to support public health interventions and programs, and be available to support research and emergency response efforts.”  Working toward making that vision a reality is among Daniel’s responsibilities. He said the fact that the federal government made electronic public health reporting part of the eligibility requirements for providers to be “meaningful users” of health IT should have a big impact.

“Hospitals have had the infrastructure in place for years, but it has been difficult to convince them to participate,” Daniel said. “They have so many reporting requirements that unless it is a requirement, it’s difficult to get them to do it. Among other things, getting them to report electronically will save us from huge data entry chores.”

With paper-based systems, the reporting on foodborne illnesses just wasn’t fast enough, resulting in secondary outbreaks, Daniel said. Now that data can flow seamlessly into the state’s disease management system, the response time can be much quicker. Daniel also expects to see great improvement in electronic lab reporting. Before the meaningful use incentives, about 50 percent of hospitals in Massachusetts were submitting lab data electronically. “I think by the end of 2011, almost everyone will be on board,” he said.

Daniel co-chairs the Clinical Quality and Public Health Ad Hoc Workgroup of the state’s HIE organization. “We have created a huge spreadsheet of all the conditions for which data is reportable and [are] deciding how to prioritize which data would be useful to get directly from the HIE, such as health-care associated infections, reporting for cancer registries or hospital birth data,” he explained. “Potentially all of that could flow through the HIE.”

There are some instances where being slower to automate may prove beneficial, however. For instance, although Massachusetts is seen as a model for other states on electronic lab reporting, it’s actually one of the last to create an immunization registry. “That may be to our benefit from an HIE standpoint,” Daniel said, “because now we can make sure it fits perfectly technologically instead of having to retrofit it.”

Federal Funds (and Pressure)

The federal government has made a major commitment to digital health records — putting lots of dollars and other resources behind the effort while trying to allow states some flexibility in how systems are designed. Nevertheless, states are finding the pace taxing, and some complain that they are being pushed to the margins of what’s possible in a four-year time frame, said Robert Wah, vice president and chief medical officer of CSC’s North American public-sector group.

“The money has suddenly put attention on this issue that wasn’t there before,” he added. “So in states where it has taken a back seat, they are playing catch-up.”

Many state governments are facing a double whammy of sharp revenue declines and the prospect of turnover in the governor’s mansion, which means many CIOs and state health IT coordinators also will be leaving. There may be some states where health IT-related issues haven’t hit home yet, said Lynn Dierker, senior program director for the nonprofit National Academy for State Health Policy. But the pace of change at the federal level should signal to incoming state officials that they must optimize the systems behind the health services they offer. “Federal agencies are really walking the talk,” she said. “They are pushing a common platform for HIE, Medicaid and health reform agendas. They are signaling how the state IT infrastructure pieces can be used to leverage each other, and they are providing the funding to pull it off.”

No matter what they think politically about health-care reform, new governors and CIOs will have to look objectively at how statewide health systems can be made more efficient. “It begs the issue of redefining the business case of what’s inside and outside state government and what kind of shared services you can create,” Dierker said. “For people sitting inthe state CIO seat, the possibility for leadership on these issues is immense.”


Miriam Jones is a former chief copy editor of Government Technology, Governing, Public CIO and Emergency Management magazines.