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Kick Starting HIEs: What Meaningful Use Asks for, What Feds are Willing to Pay

by John Moore | February 11, 2010

The release of draft Meaningful Use (MU) requirements at the end of December, finally provides clarity to what will be required of providers receiving ARRA funding under the HITECH Act to meet the 2011 objectives.  Even though there are 25 specific requirements, the health information exchange (HIE) requirements were scaled back significantly from the original recommendations approved in July 2009.

One of the key reasons for the scale back in requiring providers to exchange clinical information via an HIE is that today there is simply no existing infrastructure in place to make this happen.  Sure, there are countless HIEs today, but the vast majority of these are within a given Integrated Delivery Network (IDN) but these are closed systems.  A primary intent of HITECH is to create an infrastructure that allows for the free and secure flow of clinical data throughout the healthcare sector, across the traditional institutional boundaries that exist.  As Dr. Blumenthal, head of HHS’s ONC and directly responsible for distributing HITECH funds, put it in a post last November:

A key premise: information should follow the patient, and artificial obstacles – technical, business related, bureaucratic – should not get in the way.  …This means that information exchange must cross institutional and business boundaries.  Because that is what patients need…

The infrastructure to enable such cross-institutional exchange of health information does not exist today.

The draft MU requirements state that providers should have the ability to exchange clinical data with other systems and to report to various State and Federal agencies but there is no specific requirement for an ongoing, working exchange of clinical information.  Rather, providers need only test the system once during the reporting period for various criteria (e.g, submitting lab results to a State Public Health dept).  The only operational clinical interfaces required are for ePrescribing and Lab results.  The other HIE requirement is an administrative one – the ability to perform electronic eligibility checks and submit claims electronically.  Required compliance rates range up to 80% depending on the requirement.  The MU requirements for 2011 are expected to be finalized in March after the 60-day public comment period.

The 2011 requirements starts simply by setting the ground floor for future clinical exchange by focusing on existing transactions from Labs-to-Providers and Providers-to-Pharmacies and the aforementioned eligibility checking and claims submittal.  Starting in 2013, HIE requirements will substantially increase.  While no requirements have been formally set, the HIE requirements will likely include:

  • Registry reporting and reporting to public health entities
  • Electronic ordering
  • Health summaries for continuity of care
  • Receiving public health alerts
  • Home monitoring
  • Populating PHRs

This greatly expands on the types of transactions that will be covered and entities that will be affected including moving to bidirectional flows of clinical information from Physician Office-to-Hospital (and vice versa) and from Physician Office-to-Physician Office.  It also will require providers to move beyond providing consumers with a digital record (this is required in 2011, but sharing data with patients in an electronic format over the Net (e.g. a PHR with portability.

By 2015, HIE requirements will increase even further including accessing comprehensive clinical and administrative data from multiple sources, robust reporting requirements, and medical device interoperability.  The goal is to envision a health care system where there is routine availability of robust HIE between many of the key stakeholders (e.g, providers, patients, State and Federal agencies, labs, pharmacies, etc).  Getting there is another story entirely.

HITECH Act Funding of HIE

In order to help facilitate HIE, there are two programs under the HITECH Act that are intended to directly fund HIE-related activities: State Health Information Exchange Grants and the “Beacon” Community Program.

The State Health Information Exchange Cooperative Agreement Program is the larger of the two and the more prominent one.  Under the program, there is $564 million allocated for Statewide HIE development.  Each state or state designated entity is eligible to receive between $4 and $40 million over a 4-year period from 2010-13.  There is only award per state although multi-state arrangements are permitted.  Every state plus the District of Columbia and Puerto Rico is eligible to participate.  The size of an individual award is determined by a formula with pre-determined, multiple factors but the bottom line is that the states with the largest populations will receive the largest awards.  For example, CA, TX, and NY are likely going to receive the largest awards while smaller states or states with small populations such as WY, VT, RI, and DE are set to receive the smallest amounts.

The Beacon Community Program is slightly smaller in size and different in scope.  There is $220 million allocated to the program and unlike the State Health Information Grant process it is a competitive process.  Not only can State Agencies apply but so can non-profit Integrated Delivery Networks, Health Information Organizations, and Regional Extension Centers.  The main caveat though is that applicants must have existing HIE capabilities and high rates of Health IT adoption to demonstrate advanced quality and efficiency required of being designated a recipient under the Beacon Community Program.  The main purpose of the Beacon Program is to define best practices in the adoption and use of HIT that other communities may emulate. Applications were accepted until February 1st and the reward recipients are expected to be announced in the summer of 2010.  There will be 15 recipients who will be eligible to receive between $10 to $20 million per award.

Impact of HITECH Act funds & HIE

It is important to understand though what the HITECH Act does and does not do in regards to HIE. Neither of the aforementioned programs is intended by themselves to facilitate full implementation of HIE at the state or regional level nor does it ensure long-term sustainability of any HIE effort, although grant proposals must provide a business plan that articulates a sustainability model.  As we have seen in a number of failed HIEs to date, stating in writing a sustainable business plan and actually having one that works are two very different things.

Additionally, the HITECH Act does not explicitly coordinate funding and requirements that will inevitably flow to states across various agencies including Medicaid, State Public Health departments, etc as a result of the HITECH Act or other health care programs.  The HITECH Act also requires matching funds from states and holds states that receive funds accountable for how the funds are spent on an annual basis.

Some of these requirements have some states reluctant to make a large-scale investment in a statewide HIE effort.  In particular, the matching funds requirement that starts in 2011 at $1 dollar for every $10 federal dollars eventually rises to $1 dollar for every $3 federal dollars in 2013 has some states very concerned.  (Note: After 2013, the feds are assuming that HIEs established under this grant program will be self-sustaining.) This was most recently raised by the National Governors Association and other public policy entities have raised some similar concerns given the likely precarious budget pictures most states are facing for at least the next 2 fiscal years.

Instead the HITECH Act focuses on accelerating HIE development in the short term by providing funds over a 4-year period from 2010-13.  For most states, this means beginning begin at an early stage including creating some type of governance model (usually the hardest task) and developing their policy and technical capabilities from there.  For states that are much further along in this process including UT or DE, the ARRA funds challenges existing state-level HIE efforts to expand their purview and operationalize governance and HIE strategies at new levels.  The ARRA funds also give a modest degree of flexibility to a state in how they choose to set up a governance model, what technical approach they deem best, and what policies they need to set in place based on the unique needs of their citizens.  The only real requirements are their approach is within the framework of meaningful use and they ensure the HIE is available throughout the state.

The Wrap:

We are just beginning what will likely be a very long and arduous journey to put in place the infrastruture necessary for true health information exchange across the healthcare system.  While the funding is welcomed by many in the industry, creating regional and statewide HIEs will prove challenging as to date, there are still no demonstrable and repeatable business models to create such exchanges that are truly self-sustaining.  Hopefully, the Beacon Program will identify such model(s) that others may modify and adopt to insure the long-term sustainability of health information exchanges that in the long-term will lead to a truly networked and viable system.


The vast majority of this post was actually authored by Chilmark’s Senior Analyst, Matt Guldin, formerly of analyst firm Frost & Sullivan, who joined Chilmark Research at the end of 2009. Matt is currently conducting research on the HIE market that will culminate in a market report scheduled for publication in early Spring 2010.

One response to “Kick Starting HIEs: What Meaningful Use Asks for, What Feds are Willing to Pay”

  1. […] Article John Moore, Chilmark Research, 11 February 2010 SHARETHIS.addEntry({ title: "Kick Starting HIEs, What Meaningful Use Asks for, What Feds are Willing to Pay", url: "http://articles.icmcc.org/2010/02/12/kick-starting-hies-what-meaningful-use-asks-for-what-feds-are-willing-to-pay/" }); […]

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