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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  • CSmith MD

    Great post. I have a couple of observations. First, intuitively I feel a cloud platform with apps would be far superior to what we have now, but how secure and private could it be? Second, the way physicians are paid – especially primary care – disincentivizes adoption of these technologies. We really need a payment structure that allows us to spend time analyzing our portfolio of patients, identifying those that need changes in treatment plans and collaborating with other physicians with similar patients to develop more effective protocols. We need to record our findings, tweak our protocols and share our successes and failures with each other.

  • Adam Alpers, D.O.

    Excellent Post, The concept of point to point sharing also known as interoperability is one of the key concepts that will make the difference in reducing duplication of services. That being said, the ability to accomplish this is the question at hand. Even as the technology is coming on line, the actual utilization of this technology will be important in order to see true cost reduction going forward.

    The different EMR systems need to be completely linked to the cloud in order to enable providers to access this information in a timely manner, if we have to have different log in and password information for multiple acess points, it will be significantly cumbursome and there will be continued delays in adopting the system which we all know we are going to have to finally come to terms with.

    Small practices are going to have the hardest time getting this technology in place as the resources for a small primary care office are continually getting smaller with the constant reduction in reimbursements. If EMR is supposed to reduce the duplication of services and help with enhance patient care, then creating an income stream that is beneficial and not costly for the provders is important.

    Regardless of the incentives, the cost of implementing all of this technology is slowing down the small practice from embracing this technology. Only by maximizing our reimbursement can we even attempt to stay in business with all these reductions. EMR may help improve patient care, but the ability to capitolize and recoup the cost is important. Some of us have to take out a line of credit to purchase the system and pay off this technology over years.

    Today in the headlines there is commentary that health insurance companies are going to increase their premiums in order to cover the cost of the new health care reforms. At what point do the providers ever get to raise their fees to cover the ever increasing overhead that we are expected to pay regardless of these overhead increases. There is an incredible disconnect it the system.

    It is important for us to make sure we are able to capture all the income we are entitled, however, the system is so complicated, that every year we all leave money on the tablethat we can not afford to lose.

    Any of the leases we are currenly involved with continue to want to be paid jfor the 3 to 5 years that we have a contract and at no point does anyone of them reduce our expense due to the reduction in our fees. We are required to see more patients every day in order to keep the doors open.

    • r watkins

      This is an good example of how damaging the leadership and actions of the AAFP (and, I would guess, the other primary care organizations) have been to practicing physicians. For 15 years, they have been browbeating their membership into buying expensive, not ready for prime time EMRs; what they should have done was to state that they would absolutely NOT endorse the use of EMRs until the payment issues were addressed.

  • jsmith

    Warren Buffett says it is stupid for people to buy an investment they do not understand. I have yet to have anyone make a clear, compelling case that EHRs make economic sense (or quality of care sense, for that matter)in primary care.

  • Marc Gorayeb, MD

    Before you commit to this boondogle, have a look at the following post:
    “10 tips for troubleshooting complex EHR infrastructure problems,” posted on this blog on Sept. 11.

    The difference between using electronic systems for your back-office operations and electronic systems for your clinical operations is that back-office operational failures don’t create technological emergencies. With clinical systems, you can bet that technical problems of varying degrees will inevitably occur at the worst possible times. So when you make your calculations about how much money this will ultimately cost you, you should also consider the cost of emergency software and hardware technical support services, office staff costs to deal with system crashes, crash recovery costs, and loss of business goodwill if any complications affect your patients.

    In all likelihood, you have already extracted the economic benefit of computerized records by having electronic billing and accounting systems. For everything else in EHR, the costs are concrete while the benefits are abstract.

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