Beyond the final Medicare and Medicaid EHR incentive rules

by David C. Kibbe, MD, MBA and Brian Klepper, PhD

Finally, we have a Final Rule on the Medicare and Medicaid EHR incentive programs.

The rules and criteria are simpler and more flexible, and the measures easier to compute. But they are still an “all or nothing” proposition for physicians, who will have to meet all of the objectives and measures to receive any incentive payment. Doctors who get three-quarters of the way there won’t receive a dime. And a lot of uncertainty remains about dependent processes that Centers for Medicare & Medicaid Services (CMS) and Office of the National Coordinator for Health Information Technology (ONC) must quickly put in place, like accreditation of “testing and certifying bodies,” and the testing schemas for certification.

All in all, we expect most physicians in small practices to sit on the sidelines until the dust settles, likely in 2012 or 2013.

Nevertheless, while it is good to get Meaningful Use behind us, it may be better still seeing beyond it. After all, the incentive payments for becoming a “meaningful user of certified EHR technology” are merely a small down payment on the savings that could be realized if health care supply, delivery and payment are affected by the changing policy and market environments over the next 5 years. The EHR incentive programs are meant to prime the pump by putting approximately $25 billion, give or take a few billion, into the hands of physicians and hospitals who adopt EHR technology during the 5 years between 2011 and 2016.

During that same time, by comparison, reductions in waste, duplication, and unnecessary procedures might mean savings of $100 billion to Medicare alone, depending on whose estimate you believe and how effective you think the reforms will be in replacing payment for volume with payment for value. It might be a lot more. Conservative estimates are that 30% of our total national health care expenditure of $2.5 trillion, or over $800 million, is unnecessary and could be eliminated through real reforms. Some authoritative estimates argue that half or more of care costs are unnecessary, so the target jumps to $1.25 trillion a year.

Put another way, the REAL money in is savings from reform, not health IT, though IT is a core tool to identify savings opportunities and to manage care appropriately. Some of it will go to doctors and hospitals that figure out how to achieve cost savings and are given the opportunity to share in those savings, thereby earning amounts that could easily be 10-20 times the value of EHR incentive payments. There is economic opportunity in health care reform for providers who figure out how to address the fragmentation of care, offer care that is coordinated and continuous, deploy the information technology required to capture and analyze fugitive health data, and then serve it up as shared clinical intelligence at the point of care to guide decisions toward safety, quality, and cost-effectiveness.

With these care management cost savings in mind, we consider patient care data and clinical IT systems and components over the next five years likely to be “beyond meaningful use.” Of course, aspects of the EHR Meaningful Use incentive are themselves part of the trends, most notably the standards and protocols which EHR technology vendors must adhere to to obtain ONC/HHS certification. Here are the most important trends to watch, roughly in order of importance:

  1. The expanding uses of structured health data using XML. EHR vendors, HIE companies, consultants, and other middlemen are used to making fortunes on one-off health data interfaces between an EHR and sites of care (e.g., hospital) or service (e.g., lab). The CCR standard, and the CDA CCD, based on the CCR, are now federally approved health data summary standards in XML, the lingua franca for data on the Web and used in e-commerce. There will be other standards that employ XML to make the exchange of health data more standardized and cheaper to put in place. Removing the costs and hassles of fax machines will be the lowest hanging fruit on this vine. But eventually, health data will be Internet-accessible to services that will focus on new applications of the data, like helping doctors and patients identify the best “next steps” for prevention or treatment, or providing warnings that a patient at home is de-stabilizing.
  2. Point-to-point sharing of health data, securely, over the Internet. Local and regional health information exchanges are proliferating, but they still face the problem of communicating beyond their own boundaries. Private networks are a kind of prison. The NHIN Direct Project (soon to be renamed, perhaps as HealthNetwork Direct) is developing policies, standards, and specifications that could open the health data floodgates by using proven, trusted Internet protocols and methods, like SMTP and DNS, to create a secure channel for point-to-point transport of even the most sensitive health information. Anyone with a valid NHIN Direct address will be able to “push” information to anyone else with an NHIN Direct address, regardless of the security moats around private networks, just the same way that individuals using different client applications for email can today communicate. More secure than email in the clear? Certainly. Bound to an enterprise or a particular vendor? No. The country’s doctors and patients don’t have to wait for massive state or regional HIE infrastructures to be built and deployed in order to start making health data more liquid.
  3. Platforms+modular apps+network services. Almost everyone is familiar with this model: it’s the iPhone app store and the Android Market. It’s the use of the Internet without as much dependence on the web browser, with multiple mobile devices for platforms, and with the emphasis on replaceable apps and re-useable technology that offers up data from many sources simultaneously. Why should health care professionals and patients be locked out of the kinds of beneficial experiences we’re all getting used to with Facebook, Twitter, Amazon and Google? In fact, we think a very good argument can be made that social networking software is a key ingredient to care coordination and better teamwork in health care. But first, the older technological gridlock of client-server and walled enterprise HIS — in which the health care professional is too often a data enterer and too seldom a data user — has to be cleared from the path. CIOs in hospitals and large groups will eventually see how important connectivity and communications are to reducing overhead and improving productivity, and come to value the clinical groupware world view in which more apps, selectable apps, replaceable apps, are key to making the underlying data really useful. As this occurs, we’re likely to see some health care organizations leapfrog over legacy EHR technology and going straight to network-accessible – that is, cloud – computing solutions.

It will probably take another 5 years for these trends involving applications in personal health and clinical IT to become mainstream. There are possible accelerators and some potential decelerators to this process. Right now, for example, the federal government is clearing the way for innovation with its encouragement of modular EHR technology and incentives for meaningful use of IT rather than simply its purchase.

However, this is a long term process and the relentless lobbying power of legacy vendors threatened by being displaced could still win. If that happens, a retreat from the progress we’ve described, as well as an increasingly bureaucratic apparatus within ONC/CMS, might eventually work against innovation.

David C. Kibbe is Senior Advisor of the American Academy of Family Physicians and Brian Klepper is a health care analyst. They blog at Kibbe & Klepper on Health Care.

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