One-on-One with Post & Schell Attorneys Steven Fox & Edward Shay, Part III | Healthcare Informatics Magazine | Health IT | Information Technology Skip to content Skip to navigation

One-on-One with Post & Schell Attorneys Steven Fox & Edward Shay, Part III

March 30, 2009
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In this part of our interview, Fox and Shay talk about HITECH and the law of unintended consequences.


Edward Shay Steven Fox





It’s no surprise that the recently passed Economic Recovery Package contains billions for hospitals and physicians to invest in healthcare IT. But only by digging into the legislation — specifically the HITECH Act, part of the massive American Recovery and Reinvestment Act of 2009 — can those responsible for getting that money understand what will be required of them, and when. Healthcare Informatics Editor-in-Chief Anthony Guerra recently talked with Steven Fox and Edward Shay, attorneys and partners at Post & Schell, to better understand the substance of the act.

Part I

Part II

ES: One of the interesting provisions of HITECH – and this is not an incentive payment area, but it’s in that $2 billion bucket that we talked about earlier, is a provision that authorizes HHS to make grants to the states for what is called the loan program. The loan program allows the states to take those funds and use them, in part, to either acquire insurance or other types of credit enhancements for bond issues or other types of financing. So there are some tools that are available, and we’re talking with people in this market here about equipment pools and things like that, but that requires a lot of hospitals to pull together and cooperate and work with their hospital authorities. That’s another thing they should be doing right now. Those conversations need to get started.

AG: What about the competition issue? We've seen this before in health information exchanges and RHIOs. The best laid plans of cooperation can often be sabotaged by natural competitive instincts mixed in with some privacy concerns, that could scuttle a lot of these things. Oh, and don’t forget they have no business model.

SF: I think that’s the one element that is really missing from the whole stimulus bill. You can look at it as this certainly is the first step, if you have all the physicians’ offices wired and have electronic health records in the hospitals. But the thing that’s missing is there’s really nothing, no financial incentive or no new financial model that has come out of this that’s going to make an HIE or RHIO a reality. So I think that if, for instance, it said that in addition to the Medicare reimbursements, every hospital and physician that joins an HIE also get additional X percent reimbursement from Medicare. I think that might help jumpstart it. But without that, the only thing it said as far as moving a little bit along there is as part of the definition of meaningful use, what is a meaningful use? It says that the hospitals and physicians have to demonstrate that the EHR technology is connected in a way that improves the quality of healthcare.

For example, it talks about promoting care coordination. So that would mean that, the way I read that at least, that a physician’s office can’t just have an electronic health record, but must be connected at least to a hospital, it doesn’t have to be connected to an HIE or RHIO, but there still has to be some kind of connection between a hospital and a physician’s office so that there can be some data sharing, at least on that level. I think that’s one of the things that we’re going to see in the regulations, where they’re going to talk about what level of data sharing there has to be. But again, until it requires data sharing among hospitals and among physicians, not just between a physician’s office and a hospital, we’re still not quite there with the establishment of HIEs and RHIOs.

AG: We talked a little bit about the state level and some of the things going on there, any more thoughts on money that’s being funded to the states?

ES: Some states have taken an active interest in the development of health information technology infrastructure, other states are a little bit further behind. There’s been some good spade work done in the past few years in this area, but the states haven’t been given a particularly large role, and they haven’t been particularly well funded, if you will. I mean again, that’s the much smaller bucket by comparison, and I think that’s an area where we won’t see much until the secretary issues guidance on what the state programs are supposed to include when the states come in and apply for the grants that the law provides to them.

SF: I was going to add that there is this new category of entities that they talk about called these regional centers that are designed to be set up by nonprofits. The purpose of them is to help aid the establishment of HIEs and RHIOs and electronic health records. The way I read that, it sounds like hospitals can team together, or a single hospital can create one of these centers. I think in the comments it talked about it being modeled after agricultural extension agents that are set up in different states to help farmers. So it would be the same idea that these centers would be set up, some of them might be run by states, but others would be just non profits that are associated with hospitals and they would be set up and they would get some money; I think it talked about 50 percent funding. The 50 percent would have to come from some other source and then the other 50 percent of their operating expenses would come from the stimulus bill.

ES: But just to loop back around to your readership, Anthony; this is again a place where CIOs through their professional organizations can play a role stepping forward and talking – I mean HIMSS does a lot in this area in terms of state advocacy and things like that, and this is a time when the CIOs really need to reach out to their state representatives to educate them on what can be done and what’s needed.

AG: I just had an interesting thought. I was thinking about the physicians for a second. What’s the amount for physicians, $44,000?

SF: Right.

AG: Then it’s going to be a similar dynamic as the hospitals, that they have to prove “meaningful use” by a certain date?

SF: There will be more detail, but that one is again 2011. If they start in 2011 or 2012, they can still get the full $44,000.

AG: Right now, we have in place the Stark provision with its relaxations that took place about a year ago. With that, hospitals could underwrite or donate up to 85 percent of the cost of EMR or e-prescribing technology, correct?

SF: You’re absolutely right. There is an unintended consequence, I think, of this bill. I’ve already had clients call me and say, ‘Does this really make sense? We’re donating 85 percent of the cost of an EMR to these physicians, and now, for only paying 15 percent of the cost, they are reaping the $44,000 reward. This makes no sense.’

AG: They’re never going to kick that money back to the hospital.

SF: Of course not, but the thing is, does it make sense for a hospital who’s involved in an EHR donation program right now to change the terms and maybe say, ‘Well, you know what, we’re not going to donate 85 percent; maybe it only makes sense for us to donate some number that ends up being more reflective of what the physicians are going to end up getting back.

ES: The donations that the hospitals can make exceed EHR technology; there’s a lot of other infrastructure and connectivity technology that’s covered, and this might be the time for hospitals to focus their resources on that kind of connectivity, if you will.

AG: One other thing that came to mind about this dynamic is that when the money was being donated from the hospitals, they were able to control the IT environment by offering only one or two, three at the most, ambulatory EMR options. This really was critical if hospitals are to integrate those practices. With the money going directly to the practices, it’s going to be like the Wild West. CIOs will never stand a chance.

ES: Well, yes and no. I certainly understand that the hospitals would look at this and they would say, ‘We’ve lost some of the control that we had in the past in terms of choosing vendors with whom we have good working relationships,’ things like that. But at least theoretically, a part of the certification process is going to involve interoperability , which would mean that the systems should be compatible with one another and with the hospital. Now there’s a lot of work to be done in that area, but I think it’s a fair statement to say that certified EHRs will have to meet interoperability standards . One of the absolute clear objectives of this entire program is the exchange of health information and, without that kind of interoperability and compatibility, you simply can’t do it.

AG: From everything I know about CCHIT, the certification does not guarantee interoperability between different products. I mean, there are some specifications in there, but I don’t think we’re at the level for that interoperability. So anyway, we’ll see what happens, I suppose.

ES: I’m not suggesting that you shouldn’t look at it in the very clear-eyed way that you just described. I mean we’re in the early stages, no question about it.

SF: You’re right. I think it would make sense for hospitals and physicians to coordinate that and not just get whatever system they want without taking into account: is this going to work with the hospitals that I routinely deal with because, otherwise, then you’re going to have a whole lot of extra costs of interfaces that were not expected. That is a repeated point they make.

AG: It’s just interesting. It’s the law of unintended consequences, right?

SF: I think there’s a lot of that with anything, but for sure with this.

AG: I wrote a recent edit memo about the idea that with government money comes oversight and having to live up to expectations set by others. My question is, what do you think the government will require in terms of oversight of these programs? Hospitals and physicians will have to prove meaningful use, but will that be a yearly event? Will there be snap inspections like JCAHO does on the pure clinical side? Will the government ever attempt to recover some of its money if an organization falls out of compliance?

Part IV



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