Thought Leadership

Advancing payment reform with effective state health information exchange

Author: Megan Renfrew
Megan RenfrewDirector, Health Policy and Regulatory Affairs

November 29, 2016

Throughout the healthcare system, payers are shifting away from payment models that incentivize volume of services to models that incentivize quality, outcomes, and savings. Efforts to transform healthcare through value-based payment reform can be seen in state Medicaid managed care contracts that incentivize outcomes, delivery system reform efforts under Medicaid demonstration projects, State Innovation Model (SIM) efforts that seek to implement reforms across public and commercial markets, and Medicare’s new quality payment program established by the Medicare Access and CHIP Reauthorization Act (MACRA).

The ability to exchange health information is foundational to these efforts. For value-based reform to be effective, all parties must be able to access relevant, useable, and timely data. Policy makers need clinical and claims data to identify areas for improvement, and providers and payers need data to understand their performance relative to peers and competitors. All stakeholders need access to data to evaluate progress towards defined goals, a common one being a reduction in hospital readmissions.

There are a variety of health information exchange (HIE) models, including private health information exchanges and provider and electronic health record (EHR) specific data feeds. However, statewide HIEs have the greatest potential to share information in a manner that supports broad value-based reform efforts involving multiple payers and providers (such as SIM) that may otherwise be unable to share data due to differing data systems and EHRs. Statewide HIEs play a crucial role in these efforts by sharing clinical and other types of data between providers, state agencies, payers, and other key stakeholders. Well-designed HIEs increase data flow, enable interoperability and data transmission between these different systems, and provide valuable functionalities and tools that support value-based reform efforts.

Barriers to HIE success

Several factors have limited the success of statewide HIE, including limited adoption by providers and insufficient financing. Overcoming these barriers is crucial if HIEs are going be effective sources of the data that delivery system and payment reform efforts need to succeed.

Limited provider adoption

HIE data is most useful when provider participation rates are high. High participation rates help ensure that the data flowing through the HIE provides an accurate picture of the state’s healthcare market. This is crucial if the data will be used as a basis for provider payment.

Provider participation in the HIE is influenced by several factors. Providers often find that connecting their EHR to the HIE is cost prohibitive, particularly for small practices. Some HIEs charge fees to providers for participation and access. In addition, traditional HIEs are not integrated into providers’ EHR workflow, requiring them to log into a separate interface to access HIE data. For providers already stressed with administrative burdens, this extra step can, in and of itself, be a barrier to effective use. Limited provider adoption is also directly related to the lack of a clear business case and competitive incentives, which are discussed below.

If the information that a provider finds in the HIE is not well-designed to provide immediate benefit to clinical interactions or the broader business needs of the medical practice, an additional disincentive to participation is created. Basic HIE functions (electronic prescribing, direct messaging, and public registry reporting) are insufficient to convince providers to invest their time and money in the HIE. Some states have sought to solve this issue by mandating HIE use for certain providers (e.g. providers participating in the state Medicaid program). However, providing an HIE solution with convincing business value is more politically palatable than a mandate. It is also more likely to result in actual provider participation.

Additionally, some providers, particularly large health systems, and EHR vendors have competitive incentives to restrict information sharing. For example, if a local market has two competing health systems, each may feel that easing the other’s access to patient health information will make it easier for patients to switch their care to the other system and thus reduce patient retention.

 Insufficient financing

An additional barrier to HIE success is developing a realistic, sustainable financing model. Prior to 2010, states recognized the need for HIEs but struggled to implement them due to lack of financing. Since 2010, the Office of the National Coordinator for Health IT (ONC) has invested more than $550 million in HIE planning and implementation funding in states and territories. These funds were important to allowing states to stand up HIEs, but have largely been expended.

Although ONC funds are no longer available, states still have access to 90/10 matching funds from the Centers for Medicare and Medicaid Services (CMS) for HIE development activities that are related to:

  • assisting Medicaid providers achieve meaningful use under the EHR incentive program; or
  • Medicaid enterprise system functions and connections.

In February 2016, CMS outlined in a letter to State Medicaid Directors how funds can be used to connect non-EHR incentive program providers to the HIE if that connection supports meaningful use for providers participating in the Medicaid EHR incentive program. However, CMS funding requires both matching funding for Medicaid-related activities and additional funding for HIE activities that are not Medicaid-related. Raising these funds can be a challenge for state HIEs.

To make matters worse, the largest portion of CMS funding, which expires in 2021, is available only for development activities and not for operating and maintenance costs. As a result, HIEs will be left with unmet funding needs. Some states have solved this challenge by applying state general funds (Connecticut) or creating a dedicated tax (Vermont taxes healthcare insurance claims to fund HIE activities). However, most states look to providers to contribute through a combination of connection and transaction or subscription fees. Without a convincing business cases for using the HIE, many providers have resisted making these financial commitments.

Innovation to achieve success

To be sustainable and useful, HIEs need to innovate to eliminate barriers to success. HIE functionality should, at a minimum, include:

  1. Efficient provider on-boarding that is agnostic to the provider’s EHR system;
  2. The ability to integrate HIE access into the EHR experience, minimizing provider workflow disruption; and
  3. Alerts and notices that help providers, including accountable care organizations, manage the health of their populations to meet value-based payment performance targets.

Data analytics are another important benefit to state-wide HIEs. A strong HIE will enrich its native clinical data with data from other sources that provide important context for data analytics (including socio-economic determinates of health). HIEs can provide dashboards and other data analytics that give providers a view of their patient population and performance in comparison to other providers, helping them understand their relative financial risk as they join value-based payment programs. Payers, including Medicaid, can use clinical data from the HIE to enhance their management of value-based payment initiatives, compared to what could be accomplished with claims data alone.

HIEs can also help with consumer engagement, which is an important tool to achieving the population health goals that are rewarded under value-based payment models. HIEs can provide consumers with a longitudinal personal health record, overcoming the issue with most patient portals, which are provider specific. HIEs can deliver this information to consumers through mobile platforms capable of interacting with consumer apps that track health status and behaviors, allowing patients to contribute their own healthcare data.

To the extent that an HIE decides to seek additional state funding, it can provide analytics that help justify that investment by showing the direct impact of HIE-related activities on Medicaid program costs, hospital uncompensated care costs, and other measures that impact state budgets and key political stakeholders.

The nation’s healthcare system is in the midst of historic transformation. Statewide HIEs can play a crucial role in supporting and facilitating change.

Author: Megan Renfrew
Megan Renfrew Director, Health Policy and Regulatory Affairs

Megan Renfrew leads Cognosante’s Health Policy and Regulatory Affairs team, which advises the company on the impact of legislation, regulations, and other federal and state policy issues on Cognosante’s business, with the goal of identifying business opportunities and risks. Megan previously worked in Cognosante’s Solutions Lab, developing innovative data analytics solutions for numerous states.

TOPICS: State health and human services