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Will the New Interoperability Rules Tame or Be Tamed by Fees?

by Brian Murphy | February 07, 2020

The healthcare exchange status quo got a boost last week in a legal victory for Ciox Health. The release of information vendor challenged HHS guidance that limited the fees it could charge when patients asked it to transmit their data to third parties. The decision frees companies from constraints on what they can charge when a patient asks that their data be transmitted to a third party.

As we await ONC’s and HHS’s much anticipated new interoperability rules, the Ciox case is a reminder that there will be a lot of attention on fees – who pays and how much. It suggests too that established healthcare data businesses can and will confront any serious challenge to their revenue models. Those confrontations are more likely to play out inside courthouses than in the market economy. By way of illustration, Ciox, in a separate action in a different federal court, successfully defended itself against claims that its fees are excessive.

How third parties get access to patient data, who pays for what kind of access, and how access affects patients are more complex questions today than when Congress debated and enacted HIPAA (1996) and HITECH (2009). Over time, the way that courts and regulators interpreted and enforced the HIPAA Privacy Rule evolved. But the distinction between patient-requests and third-party requests for data remains. ONC anticipated that this distinction could make access needlessly expensive or difficult when it included the “reasonable and non-discriminatory” provision in the information blocking NPRM.

We should not lose heart because, as far off a possibility as it may now appear, market-based competition in healthcare is inevitable.

APIs promise dramatic reductions in the cost and complexity of accessing data for patients and for third parties. APIs have brought market-based competition to industries across the U.S. economy. In healthcare, they enable less costly and more effective clinical and business models. When costs drop, fees should follow. Both HHS and ONC have consistently maintained that patient data be accessible to authorized users and services via open APIs, supported by commercially reasonable fees. The Ciox case shows that healthcare players see commercial reasonability through the lens of existing revenue models.

The Ciox case shows that existing revenue models can withstand innovation unchanged. The upshot is that getting a truly market-based comparison of price and value in healthcare is not always possible. To be fair, whether an API-based healthcare ecosystem delivers value in excess of price is still an open question.

The new interoperability rules will provoke legal challenges, and probably from lots of different parts of healthcare. Those challenges are most likely to come from organizations whose revenue models may suffer. We should not lose heart because, as far off a possibility as it may now appear, market-based competition in healthcare is inevitable.

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