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Recommendations for Additional Federal Action to Encourage Health Technology Information Use and Adoption in Support of Delivery System Reform Goals

Written Response to the United StatesSenate Finance Committee’s

Request for Comments on Its Description of Policy Options for Transforming the Health Care Delivery System:Proposals to Improve Patient Care and Reduce Health C are Costs

May 12, 2009

Recommendations for Additional Federal Action to Encourage Health Information Technology Use and Adoption in Support of Delivery System Reform Goals

The Alliance for Advancing Nonprofit Healthcare appreciates the opportunity to present our views on the proposed policy option to further encourage health information technology (HIT) use and adoption, which is contained in Section III of the Senate Finance Committee’s April 29, 2009 Description of Policy Options for Transforming the Health Care Delivery System: Proposals to Improve Patient Care and Reduce Health Care Costs

Founded in 2003, the Alliance for Advancing Nonprofit Health Care is a unique blend of nonprofit hospitals, other types of nonprofit health care providers and nonprofit health plans—all dedicated to preserving, while improving the performance of, the nonprofit health sector.

The Alliance applauds the HIT funding provisions of the American Recovery and Reinvestment Act (ARRA)as a significant step forward in federal leadership and support to make HIT a reality in the U.S. Much more needs to be done, however, as part of health care reform legislation, if we as a nation are to improve patient care, reduce costs as well as achieve and sustain universal access to coverage. HIT provides an essential infrastructure for transforming the health care delivery system. Without it, other major federal policy options for transforming the delivery system cannot be implemented in accurate, fair, efficient, effective, and timely manners, such as:

  • Value-based purchasing programsfor hospitals, home health agencies and skilled nursing facilities (e.g., payment bundling, payment incentives to eliminate preventable readmissions))
  • Quality reporting by hospitals, physicians, inpatient rehabilitation facilities, long-term acute care hospitals and other health care providers
  • Clinical effectiveness research, and rapid dissemination of results of such research
  • Primary care and general surgery bonus systems
  • Chronic care management innovations and incentive systems

The best available estimates are that only about 1.6% of U.S. hospitals have a comprehensive electronic health record (EHR) and only about another 8% have even a basic EHR[i]. For physicians, the estimated adoption rates are also alarmingly low—about 4% with extensive, fully functional EHRs and about another 13% with basic EHRs[ii]. It is reasonable to assume that the adoption rates for virtually every other type of health care provider are no better, or even worse.

The Medicare and Medicaid incentive payment provisions of ARRArepresent important, direct federal financial support to hospitals, community health centers, and physicians (and some other health care professionals in the case of the Medicaid incentive payment provisions), but these provisions need to be refined and expanded in several critical regards.

First, hospitals and physicians should be eligible to receive both Medicare and Medicaid payment incentives as long as they meet the otherwise applicable criteria. This is only fair, and does not represent double payment, since the incentive amounts computed under each of these two government programs relate only to their respective patientvolumes.

Secondly, these payment incentives should be extended to all health care delivery settings, including all types of specialty hospitals, home health agencies, skilled nursing and long-term care facilities, hospices, as well as nurse practitioners and others practicing outside of a physician office. Without these extensions of the payment incentives, it will not be possible to stimulate and achieve the care coordination and quality improvement goals and programs outlined in the other sections of the Committee’s policy option paper.

Thirdly, the level of Medicare and Medicaid incentive payments should be substantially increased for all meaningful users of HIT. For instance, a recent study by Avalere Health, using government cost estimates, found that it would cost about $124,000 for a single doctor or small practice to upgrade to EHRs over a five-year period, yet the total incentive payments would be only $44,000—a shortfall of $$80,000. A recent study by the Health Research Institute of PricewaterhouseCoopers, “Rock and a Hard Place,” found that the average 500-bed hospital could lose as much as $3.2 million annually under the Medicare incentive payments.

Finally, adequate federal grants and loan support should be provided directly to nonprofit health care providers that don’t have the capital or access to capital to make the necessary front-end investments in HIT.We urge the appropriate committees of the Congress to consider the Alliance’s proposal in this regard, which can be found ion our web site, Grants are particularly critical for safety-net health care providers that are least able to afford this technology. Our reasons for this recommendation are as follows:

  • Providers with significantly lower portions of Medicare and/or Medicaid patients will receive less federal financial support
  • The Medical and Medicaid incentive payments willbe after-the-fact. In the current economic environment, many health care providers cannot generate the necessary capital or do not have sufficient access to the capital markets to make the necessary HIT investments. Increased uncompensated care, growing Medicaid payment shortfalls, reductions in elective procedures and services, losses on investments of prior earnings, and tight credit markets are all taking their toll
  • For instance, a recent nationwide survey of 439 hospitals by Thomson Reuters’ Center for Healthcare Improvement found total margins to be at historic lows—a median of 0%
  • The PricewaterhouseCoopers study noted earlier also found in interviews with hospital chief information officers that 82% had already cut HIT budgets in 2009 by an average of 10%, and 66% were expecting to make further cuts in 2010.
  • he Center for Medicare and Medicaid Services has just announced historically low net increases in payment rates for Medicare inpatient services for both acute care and long-term care hospitals and a reduction in Medicare skilled nursing facility payments
  • While ARRA requires the Secretary to provide competitive HIT planning and implementation grants to the states, and authorizes (but does not appear to require) the Secretary to provide competitive grants to states that are willing and able to establish loan funds for various types of health care providers that they choose to assist, the specific funding levels are uncertain. Moreover, in the current economic crisis, few and if any states are in a position to meet the matching requirements for such federal grants

Conclusion
We urge that the federal government include substantially more financial support for HIT in health reform legislation, for all health care providers, building upon the “down payment” in the Economic Recovery Act for creating the nation’s HIT infrastructure.

This is essential to achieving major, sustained improvements in health care safety, quality and efficiency, which in turn will make health care more affordable for all and preserve the financial viability of the Medicare, Medicaid and SCHIP programs.

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[i] “U.S. Hospital Use of Electronic Health Records Abysmally Low, Says New Study,” Robert Wood Johnson Foundation press release, March 25, 2009

[ii] Physician Adoption of Electronic Health Records Still Extremely Low, But Medicine May be at a Tipping Point,” Robert Wood Johnson Foundation press release, June 18, 2008