Commentary: How to benefit from the $19B healthcare IT giveaway

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When President Barack Obama signed the American Recovery & Reinvestment Act on Feb. 17, he not only helped to stimulate the lagging U.S. economy, he also paved the way to providing every physician in America an affordable means to enter the digital era of medicine by implementing an EHR. 

The healthcare IT component of the legislation—the HITECH Act—appropriates $19 billion to encourage healthcare organizations to adopt and effectively utilize EHRs and establish regional health information exchange networks, all while ensuring that the systems deployed safeguard critical patient data.  

The Act represents an enormous opportunity for healthcare providers. After decades of slow but steady progress towards converting our paper-based record system into an electronic one, we are taking a monumental leap forward. The Congressional Budget Office predicts that in a matter of just a few years, 90 percent of physicians and 70 percent of hospitals will be using a comprehensive, robust EHR. As a result, the country will save billions of dollars on the provision of healthcare, and our citizens will receive better informed care from a coordinated network of providers.  

But just what does the new law mean for physician groups? How can you take advantage of the billions in new funding that will be available as early as 2011? And what will happen if you fail to seize the opportunity presented by the new law?

Details of the $19 Billion

The HITECH Act can be broken down into two sections: one providing $2 billion immediately to the Department of Health & Human Services (HHS) and its sub-agency, the Office of the National Coordinator for Health IT (ONCHIT), and a second that sets aside $17 billion for healthcare providers who can demonstrate their use of a certified EHR. 

In the Act’s first section, the secretary of HHS is directed to spend $300 million of the $2 billion fund to establish more health information exchange (HIE) initiatives across the country, as well as helping existing HIEs to progress in connecting providers electronically. Additionally, the Act allocates $20 million to ensure that healthcare information standards are consistent in all settings. 

Beyond those guidelines, the Act does not assign specific dollar amounts to other programs. The incoming HHS secretary will announce how the remaining funds will be allocated by late spring. Areas singled out for investment include:

  • further interoperability and privacy standards development;
  • building infrastructure for the advances of telemedicine;
  • expanding healthcare IT in public health departments;
  • establishing a Health IT Research Center and regional Health IT Extension Centers to provide information to healthcare providers such as best practices, vendor selection, implementation and training; and
  • providing funding for federal grants via the Agency for Healthcare Research and Quality (AHRQ), Health Resources and Services Administration (HRSA), Centers for Medicare & Medicaid Services (CMS) and the Centers for Disease Control and Prevention (CDC), as well as grants to states and state-designees that will help healthcare organizations with upfront funding for EHRs.

The second part of the Act calls for $17 billion in incentive payments to physicians and hospitals. The government is focused on two primary goals in this legislation: first, moving physicians who have been slow to adopt EHRs to a computerized environment, and second, ensuring that patient data no longer sit in silos but instead are actively exchanged between providers to ensure that patients receive informed care.  

The majority of the funds within the HITECH Act are for payments that will reward physicians and hospitals for effectively using a robust, connected EHR system. There is a program designed for those that see large volumes of Medicaid patients, and another for those that accept Medicare, and in order to qualify for the incentive payments, both physicians and hospitals have to demonstrate “meaningful use” of an EHR by proving three things: 

  • Use of an EHR with e-prescribing capability that meets current HHS standards
  • Connectivity to other providers to improve access to the full view of a patient’s health history
  • Ability to report on their use of the technology to HHS

Importantly, because the government wants to spur quick action, all of the incentives include payments for up to five years, but provide the largest payments early in the program. The incentive payments begin in 2011 to