Health IT Law Blog : Health IT Law Blog : Post & Schell: Law Firm : HIT & Electronic Health Records

Healthcare Informatics Editor-in-Chief Anthony Guerra recently talked with our own Steve Fox and fellow Post & Schell partner Edward Shay about the substance of the HITECH Act and what this new legislation means for healthcare providers. The interview appears under the "Online Exclusives" section of the Healthcare Informatics Web site.

Healthcare Informatics recently published Part III and Part IV of the interview on its Web site.

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• After what has become a rather typical breach of patient privacy for Southern California, Kaiser Permanente fired fifteen employees (and disciplined eight additional employees) for looking at the medical records of Nadya Suleman, the mother of octuplets commonly referred to as "Octomom".  Previously, similar breaches occurred at UCLA when that medical center's staff leaked celebrities' medical records to the tabloids.  (MercuryNews.com, via AP, March 30, 2009.)
• Wall Street Journal reported last week that HIT stocks, especially smaller companies, like eClinicalWorks (which provide the software component of Wal-Mart's new EHR package) will benefit greatly from the billions of dollars in HIT funding included in the stimulus bill.  Also, in another sure sign of a growing industry, Quality Systems, the maker of the NextGen EHR software, is "beefing up its sales force." ("Stimulus Funds for E-Records Augur Big Windfall for Small Health Firms", Wall Street Journal, March 24, 2009.)

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The New England Journal of Medicine published a study describing dismal rates of adoption and use of EHR technology in the United States.  The authors of the study found that

less than 2% of acute care hospitals have a comprehensive electronic-records system, and that, depending on the definition used, between 8 and 12% of hospitals have a basic electronic-records system.  With the use of the definition that requires the presence of functionalities for physicians' notes and nursing assessments, information systems in more than 90% of U.S. hospitals do not even meet the requirement for a basic electronic-records system.

Financial restraints is the most commonly cited reason for lack of electronic health records.  The authors found higher adoption rates among larger, urban, teaching hospitals (which the authors partially attributed to such institutions' financial resources available for EHR technology).  Interoperability and low levels of health information exchange also have a negative effect on EHR adoption levels.

However, the authors did provide a glimmer of hope, if not good news:

From a policy perspective, our data suggest that rewarding hospitals — especially financially vulnerable ones — for using health information technology may play a central role in a comprehensive approach to stimulating the spread of hospital electronic-records systems. Creating incentives for increasing information-technology staff and harmonizing information-technology standards and creating disincentives for not using such technology may also be helpful approaches.

Thus, hopefully the incentive payment provisions in the HITECH Act will have a positive effect on adoption rates in the foreseeable future.

It is worth pointing out that Dr. Blumenthal, the new head of ONCHIT, is one of the study's authors.  This study was covered by major national news outlets, including the Wall Street Journal and the New York Times.

"Use of Electronic Health Records in U.S. Hospitals" (New England Journal of Medicine, March 25, 2009).

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A battle royal rages on among various Harvard physicians about the effects of a widespread adoption of EHR technology.  In a Wall Street Journal op-ed, two Harvard doctors questioned President Obama's claim that nationwide adoption of EHR technology will save the taxpayers as much as $80 billion annually.   Drs. Groopman and Hartzband call on Mr. Obama to "apply real scientific rigor to fix our health-care system rather than rely on elegant exercises in wishful thinking."  

However, three other Harvard physicians, including Geek Doctor John Halamka, published a Letter to the Editor in response to the Groopman/Hartzband Op-Ed, claiming that the latter did not present a full or accurate picture of the positive effects of widespread adoption of EHR technology.  In part, Drs. Halamka, Bates and Middleton claim that:

The electronic health record represents a transformational change in healthcare, and will enable an array of improvements—although it will not necessarily result if implemented badly. The electronic record is to the paper record as the automobile was to the horse and buggy. No one will want to go back.

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Dr. David Blumenthal was named as National Coordinator for Health Information Technology at the Department of Health and Human Services (HHS).  Dr. Blumenthal will "lead the effort for implementation of a nationwide interoperable, privacy-protected health information technology infrastructure" authorized by ARRA and the HITECH Act. 

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Healthcare Informatics Editor-in-Chief Anthony Guerra recently talked with our own Steve Fox and fellow Post & Schell partner Edward Shay about the substance of the HITECH Act and what this new legislation means for healthcare providers.  The interview appears under the "Online Exclusives" section of the Healthcare Informatics Web site. 

In Part I and Part II of the interview, Steve and Ed discuss the incentives for hospitals and physician practices included in the HITECH Act; new regulations to be promulgated by HHS Secretary under this Act; and what actions hospitals and physician practices should be considering at this time in order to qualify for the incentive payments under the Act.

Part III is coming soon, and we will update this entry when it is published on Healthcare-Informatics.com. 
 

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• Kaiser Permanente and IBM inked a $500 million, seven-year IT services deal.  IBM will manage Kaiser's data center operations, storage and software, but IBM will not have access to patients' medical records.  AP, San Francisco Chronicle (March 17, 2009).
• A new study expects that as much as three-quarters of prescribers will use e-prescribing by 2014 because of the incentives for adoption of e-prescribing technology included in the HITECH Act (though only about 15% of current prescribers use e-prescribing).  This could result in a massive $22 billion reduction in drug and medical costs.  Government Health IT (March 17, 2009).
• Wal-Mart is bringing its "high-volume, low-cost" approach to the medical records industry.  Wal-Mart's Sam's Club division will produce a package that will include hardware from Dell, software from eClinicalWorks, as well as installation, maintenance and training services.  According to the New York Times (March 11, 2009), the "Sam’s Club offering, to be made available this spring, will be under $25,000 for the first physician in a practice, and about $10,000 for each additional doctor. After the installation and training, continuing annual costs for maintenance and support will be $4,000 to $6,500 a year, the company estimates." This development has huge implications for the EHR market, and may actually aid the widespread adoption of EHR technology.   Healthcare IT News (March 11, 2009) also covered this story.

More news after the jump.

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The HITECH Act includes a number of provisions regarding confidentiality, privacy and security of protected health information, which significantly affect both the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and the HIPAA Privacy and Security Rules. The Act provides for different enforcement dates for nearly each of the provisions, but some of them already gone into effect upon ARRA’s enactment on February 17, 2009. Furthermore, the Act mandates the HHS Secretary to promulgate regulations regarding various privacy and security provisions, thereby delaying enforcement until the completion of the rule-making process. Consequently, there is still much uncertainty regarding the new privacy and security regime, as established by this Act.
Some of the most significant changes include:

• New breach notification requirements for covered entities. The Act requires covered entities to notify individuals in writing if their protected health information (PHI) is disclosed, lost or otherwise compromised. The notices must be given within sixty (60) days of discovering the breach; if the breach involves 500 or more individuals, the covered entity must also inform HHS and “prominent media outlets serving a state or a jurisdiction.” There are also “temporary” breach notification requirements for commercial personal health record vendors, such as Google Health, Microsoft Vault and Revolution Health; however, Google Health has claimed that the Act’s provisions do not apply to Google. We will have to await the final regulations to see if they remove any ambiguity in this area.
• Business Associates are now subject to HIPAA. Third-party administrators, health information technology vendors, benefit providers and consultants are now directly subject to certain specified HIPAA privacy and security rules and regulations. (Please note that this change in particular may require a review of existing Business Associate Agreements as well as revision of any new BAA's entered into.)

MORE after the jump.

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HHS may award grants to eligible institutions “to carry out demonstration projects to develop academic curricula integrating certified EHR technology in the clinical education of health professionals.” Eligible institutions are limited to:

• a school of medicine, osteopathic medicine, dentistry, or pharmacy, a graduate program in behavioral or mental health, or any other graduate health professions school;
• a graduate school of nursing or physician assistant studies;
• a consortium of two or more schools described above; or
• an institution with a graduate medical education program in medicine, osteopathic medicine, dentistry, pharmacy, nursing, or physician assistance studies.

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Physician practices are eligible to receive up to $44,000 per physician for meaningful use of certified EHR technology (as described here*):

• Up to $18,000 for the first year (dropping to $15,000 if first year is not 2011 or 2012); $12,000 for the second year; $ $8,000 in year 3, $4,000 in year 4 and $2,000 in year 5.  (See table after the jump.)
• There will be no incentive payments for practices establishing their meaningful EHR use after 2014 (e.g., beginning 2015).
• Meaningful EHR use by physicians will be further defined by regulations, but at a minimum, includes the use of e-prescribing and participation in “the electronic exchange of health information to improve the quality of health care, such as promoting care coordination,” i.e., HIEs or RHIOs.
• For the electronic exchange of health information to improve the quality of health care, such as promoting care coordination.
• There is a 10% premium for physicians with practices in under-serviced areas.
• However, if a physician practice does not achieve meaningful EHR status by 2015, Medicare reimbursement fees will be reduced by 1% in 2015, 2% in 2016, 3% in 2017 and beyond; and the Secretary will have the right to reduce fees by 5% starting in 2018 for those practices where meaningful EHR use is under 75%.

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Each eligible hospital (a “subsection (d) hospital,” as defined under 42 U.S.C. §1395ww(d)(1)(B)) which does not include psychiatric hospitals, rehabilitation hospitals, children’s hospitals or long term care hospitals) that achieves "meaningful" EHR use may qualify to receive from Medicare an amount equal to the product of the following formula:

Initial Amount
($2 million plus additional amounts calculated in accordance with each hospital’s Medicare discharges)

X

Medicare Share
(roughly, a hospital’s share of Medicare discharges over total discharges)

X

Transition Factor:

Year 1 – 100%
Year 2 – 75%
Year 3 – 50%
Year 4 – 25%
Year 5 – 0%

“Meaningful users” are hospitals or physician practices able to demonstrate that one’s EHR technology is connected in a way that improves the quality of health care through reported results on clinical quality and other measures selected by the Secretary. Meaningful EHR use includes quality reporting and may be demonstrated by attestation, survey response, appropriate claims or quality reporting, or such other manner as the Secretary specifies.  Of course, the question remains as to how HHS will define “meaningful” use, and we will just have to wait until the end of this year to find out. The concern is that if HHS raises the bar too high, it will exclude hospitals who will be unable to achieve it within a reasonable time.

“Certified EHR technology” will be technology that is certified by an independent body recognized by the Secretary as meeting standards for such technology established by the Secretary by rulemaking before Dec. 31, 2009.

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In the economic stimulus legislation recently signed by President Obama (the American Recovery and Reinvestment Act of 2009), the U.S. Congress has provided the health care industry with more than $17 billion in incentives to acquire and implement electronic health record (EHR) technology and the associated infrastructure.

The HITECH Act (“Act”) portion of the stimulus includes major incentives for, among others:

• Hospital systems;
• Individual physician practices (not affiliated with hospitals);
• Universities and institutions of higher learning;
• Health Information Exchanges (HIEs); and
• States and certain state-designated entities.
   

In addition to the incentives, the Department of Health and Human Services (HHS) will have broad discretion in determining the amounts of grants, loans or subsidies extended to potential beneficiaries. HHS will also propose a set of procedures for claiming or applying for such assistance, to be published in the Federal Register for comment.

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