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BCBS & CPOE

April 30, 2008
by Daphne Lawrence
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BCBSMA is sweetening the CPOE deal by providing greater financial incentives for adoption

Robert mandel, m.d.

Robert Mandel, M.D.


By 2012, Blue Cross Blue Shield of Massachusetts (BCBSMA) will require hospitals in the state to have a CPOE system in place in order to benefit from its incentive plan. While most agree that CPOE reduces medication errors and improves patient safety, the jury is still out on whether the BCBS decision will actually have any effect on implementation.


John halamka, m.d.

John Halamka, M.D.


To date, only 10 hospitals in the state (of the 72) have implemented CPOE, which requires doctors to enter every medical order, prescription, diagnostic test and blood work into a central database. “Not that many hospitals have implemented CPOE and very few have plans to,” says Dave Garets, president and CEO of Chicago-based HIMSS Analytics. “That's the big elephant in the room.”

According to BCBS, the CPOE initiative grew out of the results of a study by the New England Healthcare Initiative and the Massachusetts Technology Collaborative. It found that one in every 10 patients admitted to six Massachusetts community hospitals suffered serious and avoidable medication mistakes, and that CPOE could cut the medication error rate and save community hospitals millions of dollars by shortening the lengths of stays, reducing error rates and curtailing unnecessary drug tests and laboratory use.

“CPOE saves lives, saves money,” says Robert Mandel, M.D., vice president of Health Care Services at BCBSMA. “And we think it's so important for the care of our members that we're making it a requirement for hospitals in Massachusetts to have CPOE by 2012 if they want to participate in our incentive programs.”

According to Mandel, the CPOE incentive will mean real revenue increases for a hospital, in addition to the patient safety benefits. “We want to move away from reimbursing for quantity of volume and intensity, to paying for quality outcomes and efficiency,” says Mandel. “We've begun to increase the amount of money that's in our total compensation package to providers that's based on performance.”

Currently, 2 to 5 percent of a hospital's revenue from BCBSMA is captured in that incentive pool based on its performance, Mandel says. That's going to increase over time, and by 2012 it's possible that 10 percent of a hospital's revenue from BCBS would be captured in this performance pool — with CPOE as the threshold for participation.

In Massachusetts, the CPOE ROI is projected to be 26 months. “As the Massachusetts Tech Collaborative demonstrated, this is a project that has very easy ROI,” says John Halamka, M.D., CIO of Boston-based CareGroup Health System and Harvard Medical School (Boston). “In community hospitals especially, things like errors of omission and commission occur so frequently that this is going to pay for itself.”

And how much is that? According to Mandel, the cost is between $2 million and $3 million to implement CPOE in a mid-size, 300-bed community hospital.

Garets agrees. “The technology itself is not that expensive,” he says. “It's not the hardware and software, it's the change in management and getting to be proficient using the technology. This is hard stuff.”

Though the ROI is widely perceived as fairly quick and easy to recoup, a question many are asking is ‘Who's getting the benefit of that ROI?’ “Saying there's a 26 percent return on investment, you need to think, return on investment to whom?” says Garets. “Who's going through the pain of having to do this?” To Garets, it's the physicians that ultimately pay the price. “The dilemma is the one paying isn't the one getting the benefit.” Though, he adds, to be fair, physicians do benefit in that they're more assured their orders are going to be correct.

Getting a patient out of the hospital faster is a financial benefit to BCBSMA, and of course, a benefit to consumers because they'll be getting better care. “But will lower premiums be passed on to the patients?” Garets asks. He believes that won't happen. “The people who are benefiting are not the people who are getting hit up to buy systems — and not only buy them, but change the way they do business. And who's funding that?”

The question is, why have so few hospitals in the United States implemented CPOE? “You've got to face the reality," Garets says. "And the reality is that doing CPOE in a community hospital is hard.”

Halamka, a physician himself, agrees that the biggest challenge is the physicians, especially in the community hospitals. “At academic hospitals you have employees,” he says. “These are non-owned guys that may see patients at three different hospitals. You don't have a lot of authority over them.”



According to Garets, the CPOE implementation pattern seen by HIMSS Analytics has been, for the most part, in academic medical centers. “Use CPOE or you're fired — you can get away with that in an academic medical center,” says Garets. However, he believes that in a town with only two or three small community hospitals, facilities are fighting like mad for every patient and trying to keep the doctors happy. “The last thing you can say to them is, ‘If you're going to be on staff here you will do orders electronically.’ Because there may be docs that say, ‘Thank you very much, I'm out of here.’”

System disparity can lead to further roadblocks for the physicians, especially if every hospital in the state is using CPOE. Doctors that admit to several different community hospitals would likely need to know more than one CPOE system. “If I'm the doctor, and I admit in three different hospitals with different IS systems, I have to learn three different order entry modules. Right,” Garets says and laughs.

And those different IS systems might begin to drive doctors to one specific hospital — especially with the relaxation of the Stark laws. Hospitals can now pay for the expenses of an ambulatory EMR, especially one that ties into their EMR. “All of a sudden what you've got is a bunch of physicians that, instead of admitting to multiple places, are going to be admitting to one place,” Garets says.

Experts say Massachusetts will be the state to watch. If the BCBSMA initiative can work anywhere in the country it is probably here, in a state heavy on academic medical centers and employed physicians. According to the HIMSS Analytics study (see chart), CPOE in Massachusetts is double the U.S.' average. But yet, one third of the hospitals surveyed not only didn't have CPOE, they had no plans to implement it. “It goes back to what happened with Leapfrog,” says Garets, referring to a time when The Washington-based Leapfrog Group tried to get hospitals to adopt its safety initiatives. Half the hospitals in the country said, ‘No thanks.’”



Another study, The Healthcare Informatics 2008 Research Report, ‘Trends in Patient Safety Technologies’ published by the Vendome Group, shows that 21 percent of hospitals either do not use or are not planning to implement CPOE. “The difference in numbers says one thing to me,” says Charlene Marietti, director, corporate editorial initiatives, Healthcare Informatics. “We're nowhere close to widespread CPOE adoption despite mandates to do so.”

Halamka says he's more optimistic because Massachusetts as a community has always shared intellectual property. “I have 100 people on my IT organization that deal with clinical systems,” he says, noting that community hospitals are lucky to have two people. “What we want to do as academics is say, ‘Here's how you do it, here's the project plan; here are the configurations that work; and by the way, we have all these experts who have designed all these guidelines and best practices. And here they are for free.’”

Massachusetts has another advantage: According to Halamka, 70 percent of the hospitals in the state use Meditech. “Meditech as a vendor has agreed to work with us to enhance their product,” Halamka says. He believes the combination of academics helping out communities and the vendor putting in CPOE systems at low cost will make a real difference in implementation rates. “It takes a little of the complexity out because it's cookie cutter,” he says.

Garets agrees that the depth of Meditech penetration will make a difference — at least in Massachusetts. “Will it work in New Jersey?” Garets asks. “Massachusetts is doing some interesting things but I don't know that they're replicable in other states.”

According to Mandel, one thing is for sure: the CPOE playing field is shifting, and CIOs should pay attention to the new rules. “What this does is change the priority that CPOE has on the list of things that hospitals want to invest in.” He says he believes too often that the priority goes to revenue-generating IT, rather than cost savings. “We hope this helps them re-prioritize that list of where they're going to invest that money,” Mandel explains.

Will this be a model for Blues in other states? “We don't have grandiose visions,” Mandel says. He says BCBSMA is more interested in focusing on Massachusetts, its community. “But yes, to the extent that this can provide a model, we're happy to share what we've done.”

Garets believes the initiative, in the end, is a move in a positive direction. “I think everybody wants to do this. This is a good business impetus and it's adding fuel to the fire,” he says. “It's not easy, but it's the right thing to do.”


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