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Posts Tagged ‘CMS’

In a recent Health Affairs blog, Alex Goldsmith does a back-of-the-envelope analysis of the peculiar economics of healthcare. According to the Bureau of Labor Statistics, employment in healthcare increased by 1.149 million people from 2007-2011. He contrasts this increase in employment (read increased cost) with declining hospital admissions, low single-digit growth in hospital outpatient volumes and declining physician office visit volume (read declining economic output). A New England Journal of Medicine article published in Oct. 2011 also showed a net percentage decrease in productivity growth (see figure below).

Over this same time period there has been steadily increasing investment in IT for hospitals and doctor’s offices much of it as a result of the HITECH Act that was passed in 2009. Compared to ten years ago, more healthcare workers are doing less healthcare with more information technology. And little over a week ago a Wall Street Journal op-ed by Stephen Soumerai and Ross Koppel pulled no punches, calling the savings to be gained from IT in healthcare “chimerical.” We have known for a long time that providers themselves insist that productivity drops after installing an EHR and there is little evidence to refute such claims and plenty of evidence to support them.

The absence of productivity improvements or cost savings after big IT investments is neither new nor unique to healthcare. Way back in 1987, Nobel laureate and MIT professor Robert Solow famously said, “We see computers everywhere but in the productivity statistics.”  For the next ten years, economists leveled forests (this was a pre-internet time after all) trying to explain away the Solow productivity paradox. While the dotcom boom rendered productivity paradoxes as interesting as bell-bottom pants, few would now contest that increased use of IT drives productivity improvements. It is just a long journey to get there with some successfully surviving the journey and others not. There are plenty of examples in other industry sectors of companies that did not effectively adopt and use IT, ultimately contributing to their downfall.

The EHR Incentive Program and all of the other IT-related ONC and CMS programs have a host of now familiar policy objectives. The fact that IT is at their center says loudly that CMS is trying to coax incremental productivity improvements from a reluctant system.

So where are the productivity improvements in healthcare? While we are only one year into the meaningful use (MU) saga, we would argue that we are seeing three things: 1) the limits to IT as a productivity-boosting panacea, 2) a lag between the investment in IT and a productivity payoff and 3) an existing reimbursement model that does not effectively support IT adoption that is in alignment with meaningful use objectives.

Providers that invest: Most of the current incentives for IT adoption are aimed at the point of the healthcare spear: CMS is willing to pay most frontline clinicians in private practices, clinics and hospitals to adopt IT. These same frontline clinicians, however, are increasingly frustrated and burned-out by the fee-for-service treadmill. Simply getting a primary care physician (PCP) to meaningfully use an EHR will not allow her to suddenly double her patient load. If anything, it will likely decrease office productivity for at least a year as all staff members become familiar with and effective in using an EHR.

Measures like the Stage 2 MU objectives build on that basic EHR to let that same PCP leverage work done in other parts of the healthcare system to deliver more coordinated care. The PCP still can’t double her workload but she might be able to accomplish more in each encounter. In this instance, we see the lag between the investment in a basic EHR and the enhanced productivity of a more interoperable EHR, a time lag measured in years.

Providers that do not invest or under-invest: These incentives are not available to some segments of the provider community (e.g. skilled nursing facilities, behavioral health facilities). The limit is that non-incented providers presumably will invest modestly or not at all in EHRs, interoperable or otherwise. In this instance, the lag may well be a very long time.

Further, incentives are voluntary. Eligible providers can IT-up and take the money — or not. Nearly half of eligible hospitals have collected something under the EHR Incentive Program. The ranks of qualifying EPs, while still low, continue to grow and we will likely see a majority of EPs sign-on to this program.

The Wall Street Journal op-ed claims that ONC and providers are captives of the healthcare IT vendors.  The authors suggest that vendors, presumably in an effort to protect their markets, blocked efforts to make EHRs more interoperable, effectively blunting cost or productivity improvements. This is a fair criticism, probably true, and a clear limit to what we could expect from Stage 1 MU.

However, providers in a pure fee-for-service world have rarely found sufficient value in adoption of EHRs to justify the investment, thus the need for incentives. As the market slowly shifts reimbursement to value-based metrics, the justification to invest in an EHR begins to look more attractive to a PCP. Coupling this with future, MU Stage 2, certified EHR solutions that will better support care coordination across a heterogenous EHR landscape in a given community, the potential for true improvements in productivity appear promising. There is even a potential silver lining for providers that do not invest or under-invest as even the left-behinds have at least have a fax machine and a browser and may begin to enjoy some of the productivity gains of a reformed, networked system.

The network effect that kicks-in over time may like a rising tide, lift all boats. But this is a very slow tide that will rise over many years. Now the question is: How many of those boats have holes in them and will forever rest on the ocean’s bottom or does the tide simply rise too slow and others just pull their boats out of the water?

Note: This post has been authored by our newest analyst, Brian Murphy a former employee of Eclipsys, IBM and others as well as a former analyst for Yankee Group. Find out more about Brian on our About page.

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Today, the Center for Medicare and Medicaid Services (CMS) launched a new site that is basically an everything you wanted to know about meaningful use, ARRA, the HITECH Act, certified EHRs, etc., but were afraid to ask.  This is a reasonable attempt by CMS to get as much information online, in one location, that addresses most of the nuances of the HITECH Act and its incentive programs for physician and hospital adoption of EHRs.  Unfortunately, like most government websites, or at least those that seem to emanate from HHS, it is a drab site that presents information in a way that your mid-90’s era web designer would be proud of.  (Note: inside sources state the problem rests with a chief web design honcho at HHS who is stuck on that old model much to the displeasure of others – oh well, that’s government.)

Needless to say, the site does provide a wealth of information, though you may have to dig to find what is most important to you.  The site may also become prone to being dated, so be careful and double check other sources for more current info.  For example, the section on certification of EHRs stated that certification rules will be released in “late spring/early summer” – well they are already out, having been released on June 18th.  Hopefully, HHS, CMS and ONC can work more closely going forward to insure that information on this new, and what may become an important site, is truly current.

In launching this site, CMS is trying to get ahead of the curve and likely onslaught of requests for information once the final meaningful use rules are released. While this website states that these rules will be released, again, “in late spring/early summer,” we are now placing our bets that these rules will be released at 4:55pm on July 3rd, unless of course someone in the administration decides to postpone such an announcement until the opportune moment comes along to generate some positive press for what is currently an embattled administration.

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As required by legislation in the American Reinvestment and Recovery Act (ARRA), HHS/CMS released rules for the meaningful use of certified EHRs before the end of 2009 (late the afternoon of Dec. 30th).  Others have already written plenty on what is actually stated in these rules, therefore, let’s take a look at the potential winners and losers of these new rules as well as those where it is still too early to tell.  This analysis will be laid out over the next few posts starting with Winners below.

Winners

Consultants: At 556 pages, very few physicians and hospitals will take the time to read the complete meaningful use rules, rather hiring consultants to guide them in mapping out a strategy to adopt and implement a certified EHR to meet these requirements in the tight time-frame allowed.  Hospitals and large private practices will have the resources to hire such consultants, small practices will not, instead relying on the yet to be formed statewide extension centers.

Payers: Demonstrating meaningful use will require electronic eligibility checking and claims submission for 80% of all patient visits.  This will greatly simplify payers cost burden for payers who must currently contend with eligibility checking by phone and mountains of paper claims submissions from providers.

Large, Established EHR/EMR Vendors: These vendors have the resources and political clout to insure their apps will meet certification requirements.  They will meet such requirements either through internal development or acquisitions.  In some cases, partnerships will also be used to meet smaller, niche requirements of meaningful use.  Big boys with an established presence include: AllScripts, Cerner, Eclipsys, Epic, GE, McKesson, NextGen, Siemens, etc.

Revenue Cycle Management (RCM) Vendors: Core to most RCM vendors solutions is the ability to perform electronic eligibility checking and e-claims submission.  As this is now a core requirement for incentive payment, these vendors will see a boom in business. Smaller, independent vendors such as MedAssets and SSI will likely be acquired.  Large vendors, such as Emdeon, may expand their offerings into core EMR functionality similar to what athenahealth has done with the introduction of athenaclinicals.  Companies such as RelayHealth should also see a bump up in business as providers look to address this requirement.

Medication Checking Reconciliation & eRx Apps: A significant amount of attention is being paid to addressing medication errors and e-Prescribing (eRx) in Stage 1 of the meaningful use rules.  The HITECH Act legislation specifically calls out eRx as part of meaningful use and CMS has been promoting/encouraging adoption as well so this is a no-brainer.  The big winner here is SureScripts.  Medication/formulary reconciliation is also called for in Stage 1, something that the Joint Commission has been advocating since 2005.  Several eRx and EMR apps have embedded this functionality in their solutions.  Lastly, physicians and hospitals will be required to do drug-drug, drug-allergy and drug-formulary checking.  Companies such as First Data and Thompson as well as Cerner’s Multum solution should do well in addressing this requirement.  There are also a plethora of smaller companies, such as enhancedMD, Epocrates, Medscape, etc. that may benefit, through partnerships with or acquisitions by larger HIT firms.

M&A Firms and Small, Innovative Software Companies:: Stage 1 is asking for a lot of functionality that simply does not exist in many EHR/EMR solutions.  Larger, more established EHR/EMR companies will not have enough time to build out all the functionality required and will either seek partnerships or acquire smaller, niche vendors such as those mentioned previously (our bet is we’ll see more acquisitions than partnerships).  Due to the strong demand for niche applications to fill gaps in their solution portfolios to meet Stage 1 requirements, these EHR/EMR vendors will likely pay premium dollars for the best-in-class apps.  Small, innovative software vendors and the M&A firms that represent them will do well over the next few years.

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Late yesterday afternoon, the Center for Medicare and Medicaid Services (CMS) who holds the big bucket of ARRA incentive funds for EHR adoption, released two major documents for public review and comment that will basically define healthcare IT for the next decade.

The first document, at 136 pgs, titled: Health Information Technology: Initial Set of Standards, Implementation Specifications, and Certification Criteria for Electronic Health Record Technology is targeted at EHR vendors and those who wish to develop their own EHR platform.  This document lays out what a “certified EHR” will be as the original legislation of ARRA’s HITECH Act specifically states that incentives payments will go to those providers and hospitals who “meaningfully use certified EHR technology.”  This document does not specify any single organization (e.g. CCHIT) that will be responsible for certifying EHRs, but does provide some provisions for grandfathering those EHRs/EMRs that have previously received certification from CCHIT.

The second document at 556 pgs titled: Medicare and Medicaid Programs; Electronic Health Record Incentive Program addresses the meaningful use criteria that providers and hospitals will be required to meet to receive reimbursement for EHR adoption and use.  Hint, if you wish to begin reviewing this document, start on pg 103, Table 2.  Table 2 provides a fairly clear picture of exactly what CMS will be seeking in the meaningful use of EHRs.  In a quick cursory review CMS is keeping the bar fairly high for how physicians will use an EHR within their practice or hospital with a focus on quality reporting, CPOE, e-Prescribing and the like.  They have also maintained the right of citizens to obtain a digital copy of their medical records.  An area where they pulled back significantly is on information exchange for care coordination.  Somewhat surprising in that this was one of the key requirements written into the original ARRA legislation.  But then again not so surprising as frankly, the infrastructure (health information exchanges, HIEs) is simply not there to support such exchange of information.  A long road ahead on that front.

In Closing…

As I am on vacation and today is a powder day here in the Rockies, I will come back to this at a later date after I have had some time to review and digest these two documents.  First thought though that comes to mind is that the only initial winners here will be the consultants as few doctors have the time or inclination to pour over the 556pgs of the incentive program.  Heck, in my own brief encounters with many doctors, most have only the most cursory knowledge of the HITECH Act and that knowledge is most often full of inaccuracies.  Hopefully, those regional extension centers that HHS will be funding will go live in the very near future as there is a tremendous amount of education that needs to occur to insure this program’s future success.

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Quiet for the Holiday Break

Will be quiet here at Chilmark Research as I take a break to be with family in the western offices of Chilmark Research.  Though I’ll be skiing as much as conceivably possible, in the early mornings before the lifts open or evenings, if I have any energy left, I’ll check the news, various sites keeping tabs on the impending release of the meaningful use rules that will define the process for EHR adoption under ARRA. Doubt if I’ll have any energy to extend myself beyond that critical issue.

Speaking of which, CMS submitted its meaningful use rules for regulatory review on Christmas Eve.  Titled EHR Incentives Program (CMS-0033-P), we can expect final rules released for public review and comment in very near future.  Incentive payment schedule: hospitals may begin receiving reimbursement payments by 10/01/2010.  For physician practices, reimbursement payments begin on 01/01/11.  Of course, reimbursement is dependent on demonstration of meaningful use of a certified EHR  and we still do not know what “certified EHR” is.  Long road ahead folks – we’ll do our best to provide clarity as it evolves.

Next week, I’ll return to a more normal state of research and writing or this site.

Until then, may all enjoy the time they spend with their family over these holidays and wishing god health to you and yours for the New Year.

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champagnepopWe can hear the champagne bottles popping in legacy healthcare information technology (HIT) vendors offices across the country as they celebrate what is arguably the biggest windfall in their history, the HITECH Act and its $19.2B, that is tucked into the Stimulus Bill which President Obama will likely sign on Monday.

Unlike other aspects of the Stimulus package that were whittled down to get the required votes for passage, all things HIT came through relatively unscathed. What’s in store:

$17.2B in CMS incentives for physicians & hospitals to adopt a “certified EHR”. This is a boon to legacy EHR vendors as they will claim “certified” status via previous CCHIT certification.  Unfortunately, this language is likely to be a disaster for any innovative vendor.  No matter how much wiggle room the legislative language has as to what actually is a certified EHR (they leave it up to NIST & ONC to define), the bottom-line is that any certification process is cumbersome, time consuming and rarely, if ever, keeps pace with technology developments.  We’ve said it before and will say it again, this is extremely problematic.

Money distributed through CMS will be tiered, e.g., first year physician gets $15k, 2nd, $12k, etc.  If that physician gets started quickly (by 2010) they can reap some $41K. If they drag their feet and start a couple of years later, they’ll get a total of $24k.  A similar tiered model is also established for hospitals.  All of this is laid out in Division B of the Bill beginning on page 480.

To get reimbursement, a physician or hospital has to demonstrate that:

The certified EHR is “used in a meaningful manner”, they reference eRx.  They must be able to demonstrate the certified EHR “is connected n a manner that provides for electronic exchange of health information to improve quality of care such as care coordination.” Lastly, they must demonstrate that the certified EHR can also provide reporting on “clinical quality measures.”  Fine attributes to promote but see no reason why it must be done with a certified EHR.  Why not simply state that the physician/hospital must be able to demonstrate such activities?  You don’t need a “certified EHR” you need technology that can get the job done.

Flipping over to Division A, beginning on page 286 (real pain going back and forth between these two documents – do they do this on purpose?) we find the language that lays out how a certified EHR will be defined.  ONC will turn over $20M to NIST who will go forth and define the test standards ad implementation specifications and testing infrastructure for a certified EHR.  There on page 332, Division A we also find the language regarding the testing that NST will manage…

may include a program to accredit independent, non-Federal labs to perform testing

While they do not spell out CCHIT, sure sounds like that is who they are referring to.

An interesting little piece found on page 488 of Division B is the requirement that HHS do a study and produce a report on “Availability of Open Source HIT Systems.”  Odd to have such a study and can only think it is a pet project of someone in the VA looking to keep VistA alive or someone like Sun Microsystems looking to further substantiate the open source CONNECT NHIN they developed.

$2B for the Office of the National Coordinator (ONC). An absolutely huge amount of money of which 15% ($300M) is going directly to RHIOs/HIEs.  The nominal money spent to date, via grants for RHIOs, has been a waste.  Let’s hope this time that no money is distributed until a RHIO can provide a detailed business plan and revenue model that will make them self-sustaining within a given time frame, say 3yrs.

A significant portion of that $2B will go to establish a network of HIT Research Centers.  There will be one main Center, a number of regional Centers and HIT Extension Centers at the State level.  For State Centers a tiered funding model is also used with State having to provide matching funds that increase over time. These Centers will be established to gather lessons learned in best practices for adopting, deploying and using HIT in a clincal setting.  These Centers, in the short-term, may also be used for training HIT professionals.  Good idea, if they can keep these Centers focused and delivering value at the local level.  Agricultural Extension Services have been doing this for years with mixed success, hopefully they can learn from them.

It should also be noted that Congress has also given ONC the authority (Division A pg 322) to “develop and provide a qualified EHR unless determined that the needs and demands of providers are being substantially and adequately met through the marketplace”

Plenty more to look at in this Bill, but believe the above hits the high points, though we reserve the right to come back and add to it as we uncover more items of interest.

Concluding Thoughts

When we first wrote about HR 1, we were very concerned with the terminology for “certified EHR”.  That concern only increased upon reading very similar language in the Senate version.  It was pretty much a foregone conclusion that we were going to get stuck with that dreaded “certified” albatross, which has indeed occurred.  At this point, the best we can hope for is that insightful minds will take full advantage of the loose language in the HITECH Act and craft a definition and implementation program for certified EHR that promotes innovation, rather than hinders it.  Unfortunately, with the rush to do something, anything to get the economy on track, haste may make waste.  Congress has given ONC until Dec. 31, 2009 to “adopt an initial set of stnadards and implementation specifications” for certified EHRs.  Let us all pray that they use that time wisely.

While these legacy HIT vendors celebrate there will be many a small, innovative HIT vendor wondering what the heck does “qualified” or “certified” EHR mean as the legislation will only provide incentive payments to those physicians and hospitals that adopt a “certified EHR.”

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unclesam_health_choiceThis week, the feds made two announcements that have pertinence to the PHR market.

CMS PHR Demo Launches in AZ & UT

First, CMS announced the launch of the trial PHR program for Medicare members in AZ and UT.  Beneficiaries can chose a PHR that fits their specific needs and have it pre-populated with up to two years of claims data. Within these states, Medicare beneficiaries will have the opportunity to pick from four different PHRs to use:

  • Google Health: The big boy in the group, but arguably the one with the least features in their core PHR product.
  • HealthTrio: These were the ones that performed the CMS PHR trial in South Carolina.
  • NoMoreClipboard: They had the best interoperabilty capabilities of any PHR vendor in our May 2008 iPHR Rpt.
  • PassportMD: Based out of Florida, they offer a solution with high-touch service features.

Now that this is live, will be interesting to see just what the adoption rate is among the elderly. We’re not holding our breath. Note, previous posts for more background on the CMS demo can be found here and here.

My Family Health Portrait Gets Upgrade

And out of the Surgeon General’s office we have an announcement that they have updated the My Family Health Portrait (MFHP) service.  While others are calling MFHP a PHR, it really doesn’t even come close.

MFHP does only one thing: It allows the consumer to enter various diseases contracted by various family members that a physician may later review to understand potential predispositions to diseases based on that family history.  No, it will not store your list of meds.  No, it will not have a list of your allergies, or advanced directives, or claims data, or clinical data or anything else that may often be found in most PHRs. MFHP provides only one service, a secure place to record one’s family disease history and then share it.

What many may not realize is that in fact, virtually all reputable PHRs in the market today already provide this capability to their customers, so it does seem a bit odd that the Surgeon General would go to all this trouble.  However, there may be a silver lining here in that MFHP may provide a convenient stepping stone for consumers to become comfortable with entering health information online that can later be used with their physician. In this case a consumer is entering information with a trusted source, it is the Surgeon General after all, and the data being entered is not necessarily specific to them – more inferential and thus may not be viewed as sensitive.  Having taken this initial step,and become comforatble with it, might the next step of the consumer be to use a more robust and complete service to record, store and access their complete health profile, ala a PHR or even one of the consumer Health Clouds from Google, Microsoft or Dossia?

First released as a downloadable app in Nov. 2004, the Surgeon General’s office quickly migrated MFHP to a Web-based service in Nov. 2005, and there it sat for three plus years with little visibility (I never heard of it) and attracted roughly 25K who created a family health portrait.

On Jan. 12, 2009, following guidance from AHIC, a new version of MFHP was released.  According to the website, the new version is:

  1. Standards-based: Leveraging work done by the American Health Information Community (AHIC), both technical and core data standards have been built into the FHH 2.0 design. This means an increase in interoperability and a diminished learning curve for consumers, practitioners and researchers. They are using HL7 Family History Model, LOINC, SNOMED-CT and HL7 Vocabulary.  Wonder why not CCR?
  2. Shareable: Information can be electronically shared by the consumer with family members and healthcare providers. This new feature allows consumers to collaborate with family electronically to develop a more robust family health history record. Somewhat surprised that this was not a feature of the original Web-based version.
  3. EHR-Ready: Version 2.0 produces xml files that can be easily integrated into existing EHRs with little customization or IT support needed. Its as simple as copying an electronic file from one location into a new system. Obviously, since they are already using HL7.  Big question is, will a doctor actually import this into their EMR.  Also, do the Health Clouds today already have the data architecture/data elements in place to accept this data, let alone the plethora of PHR vendors?
  4. Customizable: The tool can be downloaded for adoption under an organization’s own brand. It is intended to be easily adaptable into patient care portals, thus allowing healthcare organizations to promote family health history taking under their own brand, use it within their own secure environment, and contribute to comprehensive “one-stop-shopping” online patient service portal.  We like this feature as it will enable providers to readily adopt MFHP, for very little $$$, rather than re-invent the wheel.

Since the announcement went out on Jan. 13th, those responsible have reported to us that they are already running into server capacity issues.  Looks like there is a demand, or at least interest in this type of service.  Checking back in 6 months will prove whether or not there is sustaining interest or this is just a flash in the pan.

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