Carrots and Sticks: The Stimulus Package Promotes Health Information Technology
Title XIII of the American Recovery and Reinvestment Act of 2009 (the Act), signed into law by President Obama on Feb. 17, 2009, among many other things, provides funding and incentives for the development, adoption and upgrade of health information technology (HIT). Although there might be disagreement over whether these measures will provide the type of economic stimulus that the Act generally is intended to create, many commentators have concluded, given the current state of the economy, that their inclusion in the Act was the only means to achieve meaningful health care technology policy reform in this session of Congress.
The Act contains a broad menu of measures to promote HIT and fund its adoption, among them:
- Giving statutory permanence to the Office of the National Coordinator of Health Information Technology (ONCHIT), previously a creature of executive order, and establishing a long list of priorities for the ONCHIT, such as an ambitious mandate to develop sorely needed standards for HIT by calendar year end and immediate funding of federal agencies to establish a national infrastructure for HIT adoption and deployment.
- Arranging for educational outreach to assist in the adoption of HIT.
- Establishing a variety of grants to states and Indian tribes to promote HIT adoption and create loan funds for providers to procure and implement HIT.
- Funding grants to academic institutions to include HIT in clinical curricula and expand medical health informatics education programs.
- Making direct payments to Medicare providers—professionals and hospitals—that can demonstrate meaningful use of certified electronic health records.
- Providing funds to states that implement Medicaid programs to promote HIT.
Most of the funding programs can be implemented only pursuant to rulemaking by the Secretary of the Department of Health and Human Services (the Secretary) and accordingly will be subjected to the political process during the rulemaking period. This may subordinate the apparent intent of Congress to regulatory take-backs and administrative second-guessing.
Given the lack of experience with an Obama-influenced Department of Health and Human Services (HHS), it is anyone's guess how much or little the ultimate rulemaking will yield in real incentives or disincentives, but it is probably safe to say there will be substantial funding of HIT initiatives over the next seven or eight years. Providers will need to stay abreast of developments and develop strategies for implementing measures to take advantage of the loans, grants and incentives offered under the Act.
Promotion of HIT and development of standards
The Act establishes as a matter of statute within HHS the ONCHIT headed by a National Coordinator appointed by the Secretary (the National Coordinator). The National Coordinator is responsible for a whole host of activities: reviewing and reporting to the Secretary regarding standards for the electronic exchange of health information recommended by the HIT Standards Committee; coordinating HIT policy and programs of the federal agencies; updating the federal Health IT Strategic Plan to contain specific objectives, milestones and metrics for the adoption of HIT, including the utilization of an electronic health record (EHR) for each person in the U.S. by 2014; maintaining an informational Web site; providing financial assistance to public interest consumer advocacy groups and non-profits to defray costs to participate under the National Technology Transfer Act of 1995; and perhaps most importantly, endorsing programs for the voluntary certification of HIT as being compliant with applicable certification criteria adopted under the Act.
The Act establishes a HIT Policy Committee to make policy recommendations to the National Coordinator regarding the implementation of a nationwide HIT infrastructure, including implementation of the federal Health IT Strategic Plan. The Act also creates a HIT Standards Committee to recommend to the National Coordinator standards, implementation specifications and certification criteria for the electronic exchange and use of health information, consistent with the implementation of the federal Health IT Strategic Plan.
In addition, under the Act, the Secretary is required to adopt an initial set of standards, implementation specifications and certification criteria by Dec. 31, 2009, including the following:
- Technologies that protect the privacy of health information and promote security in a qualified EHR.aA qualified EHR is an electronic record of health-related information on an individual that includes patient demographic and clinical health information, such as medical history and problem lists and has the capacity to provide clinical decision support; to support physician order entry; to capture and query information relevant to health care quality; and to exchange electronic health information with, and integrate such information from other sources.
- A nationwide HIT infrastructure that allows for the electronic use and accurate exchange of health information.
- The utilization of certified EHRs for each person in the U.S. by 2014.
- Technologies that as a part of a qualified EHR allow for an accounting of disclosures by a covered entity for treatment, payment and health care operations.
- Use of certified EHRs to improve the quality of health care.
- Technologies that allow individually identifiable health information to be rendered unusable, unreadable or indecipherable to unauthorized individuals when transmitted in nationwide health information network or physically transported outside of the secured physical perimeter of a health care provider, health plan or health care clearinghouse.
- The use of electronic systems to ensure the comprehensive collection of patient demographic data, including race, ethnicity, primary language and gender information.
- Technologies that address the needs of children and other vulnerable populations.
The Act does not require private entities to adopt these standards, or authorize federal agencies to require private entities to comply with them; adoption by private entities is voluntary. Federal agencies that contract with health care providers, health plans and health insurance issuers, however, must require these contractors to utilize compliant HIT systems and products where available as these contractors implement, acquire or upgrade HIT systems and products.
Incentives for use of HIT
The Act includes a number of programs to provide federal funding to promote the implementation and use of HIT and to encourage states and private sector organizations to provide additional funding. The Act appropriates $2 billion for health information technology projects. Specifics regarding the use of this appropriation will be forthcoming from the Secretary.
Immediate funding for HIT infrastructure. The Secretary is required to invest in infrastructure to promote the electronic exchange and use of health information consistent with the federal HIT Strategic Plan. This investment is to be administered by a number of federal agencies with appropriate expertise, including the ONCHIT, the Health Resources and Services Administration, the Agency for Healthcare Research and Quality (AHRQ), the Centers for Medicare & Medicaid Services (CMS), the Centers for Disease Control and Prevention (CDC) and the Indian Health Service (IHS).
Invested funds are to support the following: HIT architecture that will support the nationwide electronic exchange of health information in a secure, private and accurate manner, including connecting health information exchanges and implementing infrastructure within the differing agencies of HHS; development and adoption of certified EHRs for categories of health care providers who will not be eligible for support under the Medicare or Medicaid programs; training on and dissemination of best practices, consistent with those developed by the Health Information Technology Research Center (HIT Research Center) under the Act; infrastructure for telemedicine; promotion of interoperability of clinical data repositories and registries; technologies and best practices to protect identifiable health information; and improved and expanded use of electronic health information by public health departments.
To the greatest extent practicable, funds expended under this program for the acquisition of technology are to be used to acquire technology that meets the standards to be developed under the Act. Where it is impracticable to do so, the Secretary is to develop its own standards.
HIT implementation assistance. The National Coordinator is to establish a health information extension program that will assist health care providers to adopt, implement and use effectively certified EHR technology. In developing and implementing the HIT extension program, the National Coordinator is to consult with other federal agencies with experience in information technology services, specifically including the National Institute of Standards and Technology (NIST). To implement the program, the National Coordinator will create the HIT Research Center, which will provide technical assistance and disseminate best practices to support and accelerate efforts to adopt, implement and use HIT in accordance with the standards, specifications and certification criteria to be established under the Act.
The HIT Research Center is to: provide a forum for the exchange of knowledge and experience; accelerate the transfer of lessons learned; analyze and disseminate evidence and experience; provide technical assistance to regional and local information exchanges; develop solutions for barriers to the electronic exchange of information; and develop effective strategies for the use of HIT in medically underserved communities.
In addition, the Secretary is to provide financial assistance for the creation and support of HIT regional extension centers, which will provide technical assistance and disseminate best practices learned from the HIT Research Center, to be established by the Secretary, to support and accelerate implementation and use of HIT in accordance with the federal HIT Strategic Plan. Each regional center will be affiliated with one or more nonprofit organizations. Support will be available to provide up to four years of funding to cover up to 50 percent of their capital and operating expenses.
Applications for financial support, which will be available for up to four years, are to be decided upon the basis of merit, which will include an evaluation of such matters as: the applicant's ability to provide assistance and utilize technology appropriate to the needs of particular categories of health care providers; the types of services the regional center will provide to health care providers; the geographical diversity and extent of the regional center's service area; and the percentage of funding and amount of in-kind commitment from other sources the applicant can assure.
The goal of each regional center is to provide assistance and education to all providers in a region, but direct assistance is to be prioritized first to public, nonprofit and critical access hospitals, community health centers, individual and small group practices and entities that serve the uninsured and underinsured, as well as medically underserved persons.
The Secretary is required to publish 90 days from enactment of the Act a notice describing the regional center program and the funds that will be available. Each regional center receiving funding will be required to submit to a biennial evaluation of its performance against specified objectives. Continued funding after two years of support will be contingent upon receiving a positive evaluation.
State grants to promote HIT. The National Coordinator is authorized to award planning and implementation grants to states and state-designated entities to facilitate and expand electronic health information exchange, consistent with nationally recognized standards.
Both planning and implementation grants are contemplated. States and so-called “state designated entities” are to be eligible for grants. To be eligible for an implementation grant, the state or state designated entity must adopt a plan describing its activities and how they are consistent with the federal HIT Strategic Plan.
To qualify as a “state-designated entity,” the entity must be a nonprofit organization, procure the designation from a state, have a broad stakeholder representation on its governing board and demonstrate that one of its principal goals is to use information technology to improve health care quality and efficiency through the authorized and secure electronic exchange and use of health information.
State-designated entities will also be required to adopt nondiscrimination and conflict of interest policies that demonstrate a commitment to open, fair and nondiscriminatory participation by stakeholders, as well as satisfy other requirements the Secretary may establish.
The Secretary is to evaluate grant activity annually and implement lessons learned from each evaluation cycle in subsequent rounds of awards and do so in such a manner as to realize the greatest improvement in health care quality, the greatest decrease in costs and the most effective and secure electronic health information exchange.
These grants will require matching funds from the states. Grants are to require a match of at least $1 for each $10 of federal funds for FY 2011, $1 for each $7 of federal funds for FY 2012 and $1 for each $3 of federal funds for FY2013 and following years. For years before FY 2011, the Secretary is empowered to determine whether any state match is required.
Competitive grants to states and Indian tribes to help develop loan programs to facilitate the widespread adoption of certified EHR technology. The National Coordinator is authorized to award competitive grants to states and Indian tribes to establish programs for making loans to health care providers to promote the adoption and use of EHR technology.
To be eligible for such grants, the state or tribe would be required to submit an application to the National Coordinator with a strategic plan and update that plan annually, describe the intended uses of the funds, and provide assurance that the loan funds will be given only to health care providers that submit required reports on quality measures and use certified EHR technology supported by the loan for the electronic exchange of health information to improve the quality of care.
Loans would be provided to health care providers to assist with the purchase of certified EHR technology, enhance the utilization of certified EHR technology (including upgrading HIT to meet the criteria of certified EHR technology), train personnel in the use of EHR technology and improve the secure electronic exchange of health information. Borrowers would be required to repay their loans over ten years. Certain minimum standards for borrowers are established under the Act, including a requirement that a borrower submit regular quality reports, comply with standards adopted under the Act and have a plan for the maintenance and support of certified EHR technology over time.
These grants also require state matching funds. States and tribes participating in these programs will be required to provide matching funds of at least $1 for each $5 of federal funding. Each year the National Coordinator would be required to report to Congress summarizing the annual reports made by grantees. The first awards should come by Jan. 1, 2010. The National Coordinator is to publish regulations for the administration of this program.
Demonstration program to integrate information technology into clinical education
The Secretary also may award competitive grants for the development of academic curricula integrating certified EHR technology in the clinical education of health professionals. Entities eligible for such grants include schools of or institutions with graduate medical education programs in medicine, osteopathic medicine, dentistry and pharmacy, graduate programs in behavioral or mental health, or any graduate health professions schools.
Consideration for such grants requires the submission of an application and strategic plan for the integration of certified EHR technology in the clinical education of health professionals. Such grants must be used in collaboration with two or more disciplines and used to integrate certified EHR technology into community-based clinical education. These grants may not be used, however, to purchase hardware, software or services. In general, the grants may not cover more than 50 percent of the costs of any activity for which assistance is provided.
Information technology professionals in health care. In addition, the Secretary is to provide assistance to higher education institutions to establish or expand medical health informatics education programs, including certification, undergraduate and master's degree programs for both health care and information technology students. Assistance may be provided for the development and revision of curricula in medical health informatics and related disciplines, recruitment and retention of students to the program involved, acquisition of equipment necessary for student instruction in these programs, and the establishment or enhancement of health informatics bridge programs between community colleges and universities. Preference for assistance will be given to existing education and training programs and programs designed to be completed in less than six months.
General grant and loan provisions. Entities receiving grant or loan assistance may be required to submit a report within one year of receiving assistance that includes analyses of the effectiveness of the activities for which assistance was received and the impact of the project on health care quality and safety.
Medicare incentives for eligible professionals
The Act provides for incentives to certain professionals in the form of cash payments for those who use certified EHR technology in years 2011 through 2016 in a meaningful way and disincentives for other professionals in the form of reductions in Medicare payments for those who do not use certified technology by 2015.
For Medicare covered services rendered during 2015 or after by a professional who cannot demonstrate meaningful EHR use, the Medicare physician fee schedule shall be reduced by 1 percent for 2015, 2 percent for 2016 and 3 percent for 2017. The Secretary can continue to reduce payments if, starting with 2018, it appears that meaningful users are only 75 percent of potential meaningful users, but such reduction cannot exceed 5 percent. There is an escape clause for professionals who can demonstrate significant hardship, but that clause will apply to a professional for a maximum of five years. The disincentive does not apply to hospital-based eligible professionals.
Medicare Advantage. The Act provides for comparable incentives and disincentives for professionals providing substantial services through Medicare Advantage plans.
Medicare incentives for hospitals
The Act provides for incentives to hospitals in the form of cash payments for those who use certified EHR technology in years 2011 through 2015 in a meaningful way and disincentives for other hospitals in the form of reductions in Medicare payments for those who do not use certified technology by 2015. Many aspects of the programs are dependent upon administrative rulemaking. As with the Medicare incentives for professionals, the question remains whether the will of Congress will see light of day through the regulatory process.
For hospitals subject to Medicare prospective payment, 3/4 of the market based percentage adjustment otherwise applicable for Medicare covered services rendered during 2015 or after by an eligible hospital that cannot demonstrate meaningful EHR use, shall be reduced by 33 1/3 percent for 2015, 66 2/3 percent for 2016 and 100 percent for 2017, subject to a significant hardship excuse applicable until 2020. A similar methodology is applicable for critical access hospitals and other cost-based reimbursed hospitals that are not meaningful users of certified EHR technology by 2015.
Medicare Advantage. The Act provides for comparable incentives and disincentives for hospitals operated as integral parts of Medicare Advantage plans.
Medicaid provider HIT adoption and operation payments
The Act provides for payments to those states that have approved Medicaid plans and that implement programs to encourage the adoption and use of certified EHR technology. For qualified state Medicaid programs, the states will receive 100 percent of the payment outlays of their programs and 90 percent of their costs of administering such programs. To qualify for these payments, the programs must provide for the following:
- Program payments cannot be more than 85 percent of average allowable costs for certified EHR technology for eligible professionals and up to 100 percent for hospitals. For most eligible professionals, the allowable costs must be capped at $25,000 for the first year and $10,000 for subsequent years, reduced by 2/3 of that amount for pediatricians. For hospital providers, allowable costs are capped at 50 percent of actual costs for year 1, and 90 percent for the first two years combined. For eligible hospitals, allowable costs are adjusted to reflect the Medicaid load for the provider.
- Payment recipients are the following: eligible professionals (including physicians, dentists, certified nurse mid-wives and nurse practitioners) who are not provider-based with at least a 30 percent Medicaid patient load; pediatricians who are not provider-based with at least a 20 percent Medicaid patient load; and eligible professionals (in this case including physician assistants) practicing in a federally qualified health center or rural health clinic with at least a 30 percent load of patients classified as “needy,” which is broader than Medicaid beneficiaries; children’s hospitals; and acute care hospitals with at least a 10 percent Medicaid load.
The Act allocates $40 million for each fiscal year 2009 through 2015 and $20 million for fiscal year 2016.