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50 Little Labs

September 25, 2008
by David Raths
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States are functioning as proving grounds for healthcare information technology initiatives

Louis D. Brandeis, who served on the U.S. Supreme Court from 1916 to 1939, is often quoted as describing the states as “laboratories” for policy experiments.

Steven maier

Steven Maier

The metaphor is apt in describing the development of U.S. health IT policy. While the federal government is trying to coordinate the development of a National Health Information Network, state legislatures and governors have begun crafting innovative statewide health information exchanges, mandates, funding mechanisms, and privacy laws to move from a paper-based to an electronic health system.

The best thing about state governments' willingness to experiment is that their successes can be replicated by other states. For instance, in 2007, California passed a privacy bill that extended its financial data breach notification to the healthcare realm. Now, if there is a breach of health data anywhere in the state, healthcare providers must notify patients. The law also made clear that the data breach notification rules apply to personal health record vendors such as Microsoft and Google.

“When California passed the financial data breach law a few years ago, 30 other states followed suit. So this may be the model for other states,” says Kory Mertz, research analyst for the National Conference of State Legislatures in Washington, D.C. “This is the laboratory of democracy argument.”

Mertz, who tracks health IT legislation for NCSL, notes that all the states are struggling to cope with certain common issues. “They are all grappling with how to update their privacy laws,” Mertz says. That's why California's efforts on that front, as well as the ongoing work of the federally funded Health Information Security and Privacy Collaboration, may prove valuable to many states.

Another issue is the state's role in funding health IT adoption. “Legislators don't want to subsidize people who are already adopting health IT, but they do want to find ways to help groups like rural providers and community health centers who can't afford it,” Mertz says.

Although some budget-strapped states such as Florida have had to limit health IT project funding, Mertz listed several states that have taken the lead, including Minnesota, Vermont, Rhode Island, and New York. The Empire State has put more than $200 million, far more than any other state, into funding interoperable health records and is now considering creating a process to certify RHIOs.

Minnesota has passed legislation requiring the use of e-prescribing by 2011 and EHRs by 2015. The state has updated its privacy laws and is ready to do real-time exchange of data, Mertz says. He adds that people in Minnesota credit some of its success to the fact that state law requires that all healthcare providers and insurers be nonprofit, which they say has led to a collaborative environment in the state.

Small-state success

Some states' small size has played to their advantage. Vermont, Rhode Island, and Delaware have all made progress on statewide HIE initiatives.

Perhaps the boldest step this year occurred in Vermont, where the Democratic-controlled Legislature passed, and Republican Gov. Jim Douglas signed into law a measure to impose a fee of two-tenths of 1 percent on all medical claims to fund health IT efforts. It is expected to raise $32 million over seven years to help fund EHR adoption and HIE development.

“I think it's a really important accomplishment, and it's the culmination of several years worth of work across political boundaries,” says Vermont Rep. Steve Maier, a Democrat who chairs the House Health Care Committee. “There's an understanding in Vermont, an agreement about the importance of health reform, and that investment in health IT is an important component of it,” Maier adds. “We know we have to make these upfront investments to get to savings and improved care downstream, and it has been a challenge to find a sustainable funding source.”

Gregory Farnum, president of Montpelier-based nonprofit Vermont Information Technology Leaders Inc., which is working to implement the statewide HIE, says he believes this is the first dedicated health IT fund in the country. The state health IT plan sets a goal of more than 50 percent of physicians using EHRs in five years. Vermont is now at about the national average of 12 to 15 percent. The new revenue source will fund a mix of grants to small physician practices to pay for EHR adoption, and to pay for the HIE expansion. “We recognize that we need to move on both simultaneously,” Farnum says. “The exchange is only as valuable as the number of nodes on the network.”
Teresa paiva-weed

Teresa Paiva-Weed

Rhode Island's statewide HIE

Laura adams