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Payer Participation in Health Information Exchanges

March 24, 2011
by Jennifer Prestigiacomo
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A Tennessee HIE looks to the state to broker the deal

As financial sustainability is becoming the conundrum for most health information exchanges (HIEs), payer participation is being regarded as one of this industry’s necessary solutions. Rodney Holmes, executive director of MidSouth eHealth Alliance (MSeHA) and Burt Waller, chairman of the MSeHA board, are not alone is their opinion that commercial insurers will be a major factor in the health of current and future information exchanges.

MSeHA, based in Memphis, Tenn., was established as a nonprofit HIE demonstration pilot in 2004, the result of $12.5 million in grants from the State of Tennessee and the Rockville, Md.-based Agency for Healthcare Research Quality (AHRQ). Seven years later, most of the major hospitals and healthcare organizations in Memphis are participating in the exchange.

MSeHA’s initial architecture grew from licensing Vanderbilt University Medical Center’s (Memphis) homegrown electronic medical record (EMR), and transforming it into a hybrid model exchange that keeps data in a centralized repository, but partitions each institution’s data into separate vaults. The Nashville-based Informatics Corporation of America (ICA) was formed in early 2005 to take these developed information systems to the broader market. So, as part of the five-year grant, MSeHA started in June 2010 transitioning to the commercial product, and should be fully transitioned in April.

In the next few months, Burt Waller, CEO of Christ Community Health Services, says MSeHA will do its first exchange with the Health Information Partnership for Tennessee (HIP TN), the statewide HIE based in Nashville. And then in mid-August, HIP TN will be compliant with Nationwide Health Information Network (NHIN) standards. Other future projects include getting a much richer view of patient information within the exchange, as well as building a disease dashboard and enabling secure messaging.

Encouraging Payer Investment for Sustainability
Waller believes the greatest financial beneficiaries of HIEs are third party payers, but who have yet to financially, or otherwise, participate in MSeHA. He notes that even though he can quantify on a limited basis the savings that have been generated from MSeH, he hasn’t found any commercial insurers willing to invest in continuing it. “For them [payers] it’s a hard decision; it would be a decision where they’d need to spend money in order to save money,” he says. “I think there’s going to have to be some very real demonstrated savings documented over a relatively long period of time [to encourage them].”

Rodney Holmes notes that along with payer participation, several more revenue sources will be needed for MSeH’s long-term sustainability. Currently, half of the budget is funded through participation fees, but in the future he’s not sure this will be enough. He does see a business case for the state, as well as insurers, for paying for an exchange that will bring significant savings to the healthcare system. “I don’t think it’s going to be a slam dunk by any stretch of the imagination, but then again the local exchange doesn’t have the power to really persuade the insurers to come to the table,” Holmes says. “The State of Tennessee, as a surrogate for all of us [HIEs], probably has a much better position, much more leverage for the insurers as we would. That’s why we’re looking to them to broker that for us.”

With the governorship changing from Democrat to Republican [Bill Haslam], Waller is uncertain whether the current administration will be as willing to convene payers and encourage them to participate in HIEs. He does note that there is an active business group on health in the state, whose leadership is aware of the value of HIE, but it remains to seen if they, as well as the governor, will spread the HIE gospel.

Lessons Learned
Historically, hospital participation has not been difficult for MSeHA to obtain; the greater challenge has been in courting physician acceptance and engagement. “I think the hard part of engagement has been with the smaller physician practices because their perspective very much represents the perspective of the practicing physician, which is ‘why is this important to me, what are the benefits I receive that would offset the cost of participating, and what is the impact on my bottom line?’” says Waller.

Waller has seen several organizations’ utilization plummet when a physician champion of the system leaves the hospital. Waller says that getting more physicians engaged means getting usage of the information exchange embedded into daily clinical workflows.

Waller also notes that due diligence must be spent on privacy and security issues. As he’s learned through attorneys, the laws regarding how personal health information (PHI) can and cannot be used are still being developed from state to state. So, HIEs today have to be cautious, he says, and patients must have trust in system to want to participate.

Holmes sees consolidations in the HIE market on the horizon. “I think you will see some consolidation, maybe not of existing HIEs, but those that are coming up, instead of creating new ones, just sort of folding into ones that already exist,” he predicts. He adds that in states with just a few existing HIEs, like Tennessee (which only has two active HIEs, MSeH and CareSpark based in Kingsport), that new HIEs will leverage the existing infrastructure of those established HIEs instead of creating new exchanges. Holmes mentions there are three such communities in Tennessee that are currently pondering this issue.


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