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The Big Business of Electronic Health Records, Part 2

By John K. Higgins
May 18, 2010 5:00 AM PT

Part 1 of this series discusses the growing trend toward adoption of electronic health records among healthcare providers, insurance companies, and government agencies.

The Big Business of Electronic Health Records, Part 2

The U.S. healthcare sector is about to embark on a multibillion dollar information technology investment program to provide electronic medical records for tens of millions of patients.

Doctors will receive as much as US$44,000 each to implement an electronic health record (EHR) system, and hospitals will receive millions of dollars for utilizing EHRs. The funds will be provided by the U.S. Health and Human Services Department (HHS). The total investment by HHS could reach $40 billion over the next several years.

But there's a catch.

Like most federal programs, financial aid comes with strings attached. The strings in this case are a proposed set of comprehensive requirements that healthcare providers such as doctors and hospitals must meet to qualify for the funding.

The federal EHR program authorized under the American Recovery and Reinvestment Act of 2009 consists of two parts. The first provides financial assistance through Medicare and Medicaid to healthcare providers who implement EHR systems. In the second phase, instead of receiving financial assistance, providers who fail to comply with EHR implementation requirements will be penalized by reductions in their Medicare or Medicaid reimbursements.

The 'Meaningful Use' Challenge

To ensure that all funding assistance is invested and used in a substantive way, HHS will require that healthcare providers implement electronic records programs that meet government "meaningful use" criteria. In addition, HHS will supervise overall system standards, including certification of IT products offered by vendors for EHR purposes. That includes interoperability criteria related to the ability of different IT systems and software to communicate and exchange data. For an initial period, HHS will be the standard-setting body for the IT products and services, but that function could eventually be turned over to a non-government body. HHS has issued several proposed rules related to the achievement of "meaningful use."

For example, in the first of three stages for implementing the program, doctors would have to electronically capture health data in a coded format; use that data to track clinical conditions; utilize clinical support tools to manage cases and medication; and report on clinical quality measures. Other requirements include using computerized provider order entry (CPOE) for 80 percent of transactions involving medication and lab services; transmitting at least 75 percent of all prescriptions electronically, and providing electronic records to 80 percent of patients. Hospitals would be required to meet similar compliance measures, including making reports on as many as 35 medical quality measures.

All healthcare providers would need to utilize EHR systems that met federal certification standards. In general, compliance by healthcare providers would be required by the end of 2015. In 2016, penalties for noncompliance would begin.

Rules Could Delay IT Use

Both IT vendors and healthcare providers are wary that the proposed federal regulations for obtaining the funds could actually stymie the adoption of EHR programs.

"While the proposed rules would push the industry forward through a challenging set of requirements, we have concerns that the proposals do not accurately reflect the amount of time it will take providers of all sizes to efficiently prepare to demonstrate 'meaningful use.' The proposals do not reflect the different workflows and clinical requirements inherent to different specialties," Diane Jones, vice president for policy and programs for the eHealth Initiative told CRM Buyer.

Currently, fewer than 50 percent of physicians use even basic EHR programs, according to a recent study of the electronic health records market by Kalorama Information. For HHS to expect doctors to gear up from present levels to those required by the program, including the computerized transaction goal, and to do so by the HHS deadline, is overly ambitious, Bruce Carlson, Kalorama's publisher said.

"We can understand HHS not wanting to give an incentive just for buying software, but rules that do not match the ground truth will not be helpful in achieving goals," Carlson told CRM Buyer.

"Getting physicians used to these systems is the challenge to a totally paperless healthcare system in the United States, and we think gradual, achievable goals would be preferable," he said.

The single objective approach proposed by HHS, whereby healthcare providers must comply with multiple requirements simultaneously, introduces significant challenges for both healthcare providers and IT vendors.

"In most cases, 80 percent compliance is a difficult level to achieve when eligible providers are re-learning workflows and other challenges associated with implementing certified EHR technology," the Healthcare Information and Management Systems Society (HIMSS) said in comments on the proposal.

Instead, HHS should focus on enabling healthcare providers to gear up for EHR while meeting more limited goals with less focus on percentages, said HIMSS.

The federal EHR development process that has emerged over the last year "introduces too much uncertainty too late in the game," according to the Electronic Health Records Association (EHRA), an affiliate of HIMSS.

"This uncertainty causes a tremendous amount of inefficiency and waste in the vendor community, decreasing our ability to continue to provide innovative solutions to the market," the group said.

"The vendor and provider concerns are valid, and the smaller provider organizations will find the meaningful use requirements particularly daunting," Lynne Dunbrack, program director at IDC Health Insights and author of a recent report on EHR vendors, told CRM Buyer.

"For example, if a healthcare organization has not deployed a CPOE application today, it will be next to impossible to begin a vendor search, evaluate products, transform clinical workflows to accommodate CPOE, and implement the product in time to maximize incentive payments under the federal program. CPOE is not an application that should be implemented hastily," she said.

"That said, if we don't start somewhere as an industry, we won't get anywhere and make progress towards the laudable goal of an electronic health record for most or all Americans by 2014," Dunbrack added.

It appears that the starting point outlined in the federal proposals could well be changed to address industry concerns while still retaining the necessary momentum for EHR adoption noted by Dunbrack.

Senators Seek Flexible Approach

The IT vendors and healthcare providers that have expressed their concerns about the proposed EHR rules and have asked HHS to adopt a more flexible stance appear to have strong backing from an influential source. A group of 37 members of the U.S. Senate have asked HHS Secretary Kathleen Sebelius to change the department's approach.

"To help ensure success in achieving 'meaningful use,' we recommend that the proposed rule be modified from its current all-or-nothing approach to one that allows providers to defer a limited set of criteria under Stage One while preserving a floor of mandatory functional use requirements. The deferment would only be temporary, as all criteria should be met over the course of the incentive payment program," the Senate group says in a joint letter to Sibelius. The group includes Sen. Max Baucus, D-Mont., chair of the Finance Committee, and Sen. Tom Harkin, D-Iowa, chair of the Health, Education, Labor and Pensions Committee.

"This approach would make significant advancements toward adoption and meaningful use of health information technology, while allowing an appropriate amount of flexibility for eligible professionals and hospitals.While we believe that the general implementation framework outlined in the proposed rule should be preserved, starting with a phased, flexible approach to meaningful use would be a constructive change," the senators argue.

Both IT vendors and healthcare providers will have a better idea of how to react to the federal program when HHS issues final EHR regulations, probably by mid-summer.

The Big Business of Electronic Health Records, Part 3


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