SureScripts-RxHub

On July 1, the public was informed that SureScripts and RxHub merged into a single entity called, for the present, SureScripts-RxHub.

• Follow this link to the press release
• Follow this link to the WSJ coverage
  
• See coverage in the Washington Post
• Read the Associated Press release
  

This is exciting news for health care and for me personally. As an Express Scripts VP, I had the good fortune to be present through the planning for the formation of RxHub and, until the formation of the new company, was more recently a member of the SureScripts Board. So I've been a direct witness to the great efforts of both organizations. I add as well that the only facts in this posting are publicly available and that any conjecture on my part is simply that; I have not speculated in areas that I may have formally discussed with either entity.

History
RxHub was originally formed in 2001 by three pharmacy benefits managers (PBMs) - Advance/PCS (not yet acquired by CareMark), Express Scripts, and MedCo. With various acquisitions, the current owners of RxHub are Caremark, Express Scripts, and Medco. Other PBMs are planning participation. RxHub was formed primarily to simplify the task of e-prescribing for vendors. Since this organization (and SureScripts as well) were formed before standards were promulgated at a national level, these organizations were de facto standard setting bodies. RxHub derives its revenue from formulary eligibility checks and its costs are offset primarily by PBMs. Medication histories are based on medical claims. The first CEO of RxHub was Jim Bradley, now the Chairman of the Board of Prematics.

SureScripts was also established in 2001 by NACDS (National Association of Chain Drug Stores) and NCPA ( National Community Pharmacists Association) - the leading retail pharmacy associations. SureScripts derives its revenue from true e-prescribing messages (new scripts or refills) but not from fax messages; these costs are payed by pharmacies and additional funding is through various debt mechanisms. Medication histories and messaging is primarily through NCPDP SCRIPT. The founding CEO of SureScripts was Kevin Hutchinson, who now serves as CEO of Prematics under Jim Bradly.

Hence, over the past few years the charismatics founders of both RxHub and SureScripts are now working on the vendor end and hence working through the very organizations they created. Small, small, world.

From the outset, these two organizations both competed in some sectors and demonstrated remarkable collaboration in others. In principle, a direct connection between e-prescribing systems and PBMs through RxHub presented the theoretical opportunity to promote diversion of prescriptions from retail phramcies to PBM mail order pharmacies. An effort by the retail pharmacies to promote direct connectivity would mitigate this risk. Similarly, a direct connection with pharmacies without the presentation of formularly options would not simplify the process of PBM-based drug trend management. Both RxHub and SureScripts, no doubt, saw the need to simplify the process of e-prescribing. Both were committed absolutely to establishing national standards to simplify medication management and both actively participated in standards bodies long before the establishment of the HITSP structure created by the HHS Office of the Network Coordinator.

Standards were the easy part. Progress in medication management has been slow in coming. E-prescribing is a complex "dance" among the prescriber and staff, the pharmacy and staff, and the consumer. Each must re-think their activities and deviate from the norms set by fax-based or paper-based prescribing. In many areas, adoption of e-prescribing has been much slower than many of us would have expected. We underestimated the complexity of the system and the comprehensive effort required to provide incentives sufficient to change the behavior of prescriber, dispensing pharmacist, and consumer.

But recent progress is heartening. Where PBM coverage is high, medication histories are increasingly available through RxHub and eligibility checks are growing in frequency. Particularly where chain drugs stores are dominant, true e-prescribing (digital communications, not fax) is growing and fax is disappearing. Still less than 5% of prescriptions are at present sent in digital format.

The New Organization
The new organization will be governed 50:50 by the organizations that founded RxHub and SureScripts. Board composition will be 3 members from the PBM industry and 3 from the retail pharmacy. Management will be under to interim co-CEOs, J.P. Little and Rick Ratliff, who formerly were acting CEOs of RxHub and SureScripts, respectively.

The joint organization will maintain its prohibition of commercial messaging. Given the numerous tensions and differing business models, one can also reasonably assume that secondary sale or distribution of data will not be practiced (although each source PBM or pharmacy, one would assume, will continue whatever their current business practices are). In my personal view, the combined organization presents no new threat to the public through commercial intrusion or misuse of personal health information.

SureScripts-RxHub can be expected to emphasize the following practices in a more consistent and uniform way:

• Prescription routing. One imagines that the SureScripts' capabilites will be enhanced to expedite digital messaging between prescribers and pharmacies to simplify the ordering, dispensing, refill requests, and medication fill status. Perhaps the PBM mail order pharmacies will be added to the SureScripts network.
• Payor transactions. The RxHub eligibility checks will presumably continue to be developed to simplify coverage notification and formularies. (Suggestion to the PBM industry; a few hundred - or thousand fewer formulary and nuanced prior authorization rules would simply things immeasurably). Both SureScripts and RxHub supported various repositories of formulary and eligibility information; presumably there is some redundancy here and simplification will be a benefit to vendors and clinicians.
• Rx history. This is perhaps the most exciting and uninished piece of work that can be addressed by the joint entity. Currently, historical data - if it is present at all - comes via the RxHub claims database or from SureScripts NCPDP script messages. But the RxHub database is claims-based and may suffer both from latency and incompleteness (if low cost-drugs are not entered into the claims database or if the individual is either self-pay or enrolled in a plan not currently connected to RxHub). Although virtually every chain drug store and the majority of independent pharmacies can communicate through e-presribing standards, many SureScripts member pharmacies have not completed medication history service agreements nationwide, but such agreements are anticipated in the next few months. Much work will have to be done. My guess (often wrong) is that prescribers will demand such a service at no cost as a quid pro quo for e-prescribing. Consumers will demand audit logs and various forms of authentication to ensure their medication histories are only accessed for appropriate reasons. As I have argued repeatedly, echoing the Commission for Systemic Interoperability Report of 2005. One of the major national health information technology priorities should be the creation of services that provide complete, reliable, and confidential prescription medication histories for every American. Sadly, although NHIN, ONC, HHS, and others have endorsed standards (often those emphasized by RxHub and SureScripts), follow-through has been disappointing and, to the best of my knowledge, the merger of these two entities is the result of a private-sector business need in the public interest, not the result of top-down regulatory pressure from the government. Fortunately members from both organizations have worked to simplify and advance the currently somewhat complex ONC medication management use case.
  
• Pharmacy interoperability and care support. One can expect the combined entity to continue its enhancement of patient health information messaging among providers and dispensers to ensure better coordination and safer medication use.
• Network support. The at times conflicting interests of the retail, chain, and PBM organizations (as well as the comepition within each sector) will necessitate contiuation of the tradition of neutrality, transparency, and efficiency currently critical to the success of each organizations. Again, the very tensions among the stake holders act, in my view, in the public interest here.

Implications
The announcement is great news for American consumers, health care organizations, intermediaries, and the health information management industries. Pressure for mandatory e-prescribing is mounting. The DEA has been under considerable congressional pressure to allow controlled-substances to be prescribed through digital devices and has issued a Notice of Proposed Rule Making (Federal Register June 27, 2008, volume 73, number 125).

At present, e-prescribing is still an incompletely practiced new form of coordination among prescriber, dispensing pharmacist, and the consumer. It is a system where everyone has to see benefit and change their behavior in some ways. There are many benefits in an ideal world, but in many instances, a lot of work must be done. Change is not easy.

The timing could not be better. Clinicians (both prescribers and dispensers), the staff working within clinical organizations, vendors, and the public are facing a complex array of challenges. In most instances, successful implementation of e-prescribing solutions for communities is the product of de facto collaboration among SureScripts, RxHub, pharmacies, payers, intermediaries, clinicians, and the public. Anything that simplifies the overall process should be applauded.

We are fortunate that the two organizations forming this new entity have complementary missions and have demonstrated a track-record of collaboration. Formalizing this relationship comes at a critical juncture. It is a unique and positive story.

Let us all wish them the best of luck.

The Markle Foundations Connecting for Health Common Framework for Networked Personal Health Information

On Wednesday, June 25, the Markle Foundation's Connecting for Health Initiative will release a series of materials collectively entitled a "Common Framework for Networked Personal Health Information."

• Follow this link to the CFH Framework home page
• Follow this link to the press release
• Follow this link to the endorsement letter (PDF)
  

This work will be a follow-on to a much less detailed brief written in the context of the Connecting for Health Framework for Networked Personal Health Information. In this earlier phase, the attention was directed at providers and the means by which one assured trust was through contracts.

This very detailed and comprehensive set of documents will be based on a small set of common expectations; rules and protocols applicable to all exchange; the value of overcoming barriers to information sharing; and the improvement of the public trust. Without such an approach, many fear the policies will be monolithic and not sensitive to the variety of contexts in which health information is used. In lieu of a clear approach, piecmeal efforts may slow progress and innovation; implementation efforts may be disconnected from policies; and these approaches may place excessive reliance on consumer consent. Add to that, some approaches may simply not be practical.

What we are facing, many believe, is a "privacy gridlock" where too many parties are seeking the impossible perfect. The alternative is to show that extreme rhetoric is not necessary and that most efforts can rely on the enormous efforts that already have addressed some of the fundamental issues.

Three common expectations often articulated are:

• Core privacy principles
• Sound network design
• Oversight and accountability

These are based on the broader set of guiding principles articulated in the Markle Comprehensive Framework. The three expectations have recently been discussed in Deven McGraw's June 4 testimony to the House Energey and Commerce Subcommittee, Health subcommittee.

The framework could be used as a set of guiding principles for a loose form of "certification" that defines attributes organizations, systems, or products must have to be included in federal health care initiatives, e-prescribing initiatives, health information exchanges, product development, consumer group activities, and other endeavors in which trusted use of health care information is necessary.

The new documents are impressive in scope. They are heavily-referenced and reflect the best thinking of some of the Nation's leaders. These are sound and comprehensive recommendations, but they are not necessarily prescriptive. They allow individuals and organizations to internalize and interpret recommendations in ways that seem most appropriate for their needs.

The Markle Connecting For Health Subcommittee on Quality and Cost Effectiveness

On June 19, 2008, the Markle Foundation Connecting for Health Steering Group met to discuss means of disseminating the Common Framework for Networked Personal Health Information and to discuss ongoing population health activities.

Now in its fifth year, the Markle Foundation has made remarkable contributions. Established in early 2004, the first public briefing on the Markle Agenda was held at the National Press Club on June 25, 2003.

Zoe Baird led the meeting discussing a meeting held last week by the Senate Finance Committee. Much was said about a universal health care financing vehicle and great attention was paid to costs. Although comprehensive legislation is not expected, incremental steps will be taken and information technology - wisely used - will enable better health care.

Some have lamented the lack of agreement that would allow the Government to use its market power as a payer for care. There is enough focus now with Congresional engagement and presidential campaigns that investments could be anticipated. One must make sure that the right kind of open markets are realized and, for this reason, both a consumer framework and a population health approach will be essential to the debate. There was significant discussion about the CBO report (2976) that pointed out where CBO believed additional congressional support could improve adoption and health.

Response to the CBO Report

Dr. Blackford Middleton noted the report gave a "reasonable review and summary of the literature on HIT value." Some CITL report aspects "were not represented well." These include:

• A fundamentally different purpose for the report - the impact of funding
• Value of un-standardized (level 3) vs standardized (level 4) interoperability.
• They failed to note how CITL accounted for the current HIT context; CBO factored in existing provider-payer data exchanges, and existing lab and pharmacy integration
• CBO treated costs of providers information systems but inadequately treated the internal benefits; their notion of data exchange was relatively restricted.
• CITL differed with CBO on lab administration costs; phone call rates - but these were not key determinants of overall value
• CBO's critique did not discuss some of the limitations of HIEI model limitations. The CITL model was more expansive and included realizing savings through quality improvements and the potential clinical benefit.

In the same discussion Zoe Baird noted that it isn't so much the report as how it is depicted to the public. Initial reports were rather unitarian in the view declaring that benefits are not there. CBO - recruiting a broad and talented array of health care economists - has emphasized a broader and more constructive mesage.

Subcommittee on Quality and Cost Effectiveness

One member of the committee expressed extreme frustration. After years of measurement, we haven't been able to "move the needle even one millimeter." People are "tired of it" and "it's time to move on." We need to measure something that counts and quite measuring for the sake of measuring. We do have measures that work - hospital infections, falls, and adverse events. There are very good programs on this focused primarily in hospitals - and this is done without "micro measurement" and by exploring different ways of including things into the processes.

To make an analogy, it is as if one measures the outcome of the Indianapolis 500 by measuring the piston characteristics, fuel injection performance, and, after adjusting for severity, develop an outcome metric!

It's time to re-think and move past the self-interest.

A second member empahsized the need to focus on a few simple things rather than continuing to expend energy as has been done over the past five years. Examples were providing a medication history for every American and better access to laboratory data.

One physician pointed out that "it isn't funny anymore" and spoke of an ongoing event concerning a relative where his personal presence was critical to pull together the various parties involved in the care of his hospitalized relative. Many providers stated "they really didn't have all the details" and depicted a number of clear outcomes that were the result of failures in the system. (The story rivalled that Regina Herzlinger tells in her recent book, "Who Killed Health Care.")

Five Potential High Impact Ideas

The Subcommittee currently is exploring five simple "high impact ideas"
for discusion as a sub-set of a more extensive list. They are:

1. Measures that matter. Set big goals, like reducing cardiovascular events in the US over the next Y years by X%. Currently some measure for reporting rather than measure for improving. Measurement of "surrogate outcomes" should be abandon as "futile."


2. Eliminate nosocomial blood stream infections in the US. This requires widespread adoption of evidence-based work flows involving every provider.


3. Implement a national device registry. A simple correlation between surgeons and selected devices (e.g., hip prostheses, stents) would reveal variation.


4. Make formularies on-line. (This writer would like to see no more than 50 formularies in the united states rather than thousands. In other words, "formularies that matter" not automating the thousand-plus variants of dubious value)


5. Share a visit summary. Trials of interchange of CCR and CCD docments have been successful and hold great promise.

The overall approach is not to create another silo but rather to bridge with focus the gap between the many quality initiatives and the principles in policy and technology that are required to realize these objectives and improve them over time. The emphasis is on simplicity and evolution. Measures that matter, nosocomial infections, and visit summaries can be simplified by the maxim: "quit killing people" by focusing on a few systemic issues.

Some correctly point out that goals like elimination of nosocomial infections will result in part from the CMS regulations that prohibit payment for complications.

One strategy is to try to minimize rules that don't help. An example is the requirement for tamper-resistant prescriptions that require special paper and run counter to the technology imperatives expressed by this same government.

Rather than focus on delivery organizations, one should want to identify the four or five top diseases and measure what is required across the continuum of care. Instead, we get the "where do I fit in?" syndrome where roles are emphasized over results (e.g. "measures for anatomic pathologists").

These notes do not express the opinions of the Markle Foundation and may not accurately reflect the ongoing debate and discussions, but hopefully provide yet additional emphasis on why this vital organization's agenda should be supported.

Two New e-Prescribing Reports

The Summer of 2008 will not be a time of rest for the e-prescribing and medication management industry. As part of what may be only an initial new round of industry and organizational activity, two reports have been released within the past week.

• The Center for Health Transformation has released a report entitled "Electronic Prescribing: Building, Deploying and Using E-prescribing to Save Lives and Save Money"
• The eHealth Initiative and the Center for Improving Medication Management have released a report entitled "Electronic Prescribing: Becoming Mainstream Practice"

The CHT report provides an optimistic review with a highlight of many of the activities taking place across the country. The Southeast Michigan initiative, in particular, is worth note. The report emphasizes the value realized when medication management changes are implemented in a systematic and thoughtful way.

The eHI / CIMM report has a more thoughtful, cautionary tone.

The report identifies six issues that require additional work; none of these issues prohibits effective use, but each issue must be considered carefully as policy evolves:

1. Financial cost
2. Workflow change
3. Change management
4. Ban on transmitting prescriptions for controlled substances
5. Hardware and software selection
6. Pharmacy, payer/PBM, and mail order connectivity
7. Remaining standards require approval: prior authorization, structured and codified SIG, and RxNorm.
8. Unresolved challenges in medication reconciliation

The steering group also made five very important recommendations. Summarized, they are:

1. The federal government must address the DEA prohibition on e-prescribing of controlled substances.
2. Payers, employers, health plans, health systems, and federal and state governments should consider replicating and expanding successful incentive programs.
3. Care providers across every setting of health care should adopt and effectively use e-prescribing.
4. Create a public-private multi-stakeholder advisory body to monitor, assess, and make recommendations to accelerate the effective use of e-prescribing.
5. All stakeholders should advance the e-prescribing infrastructure.The federal government and the private sector should continue, and accelerate, the development of standards for e-prescribing.

These are good reports, well worth the read before the rhetoric increases to an even greater extent.

NPI: Challenges Remain

In a May 29 Modern Healthcare Posting entitled "Claims processors see
rejections spike with NPI," Joseph Conn mentions the impact of NPI on claim rejection rates. Implemented around a holiday weekend, early "grim reports" suggest a massive increase in claims rejection rates. The lead paragraphs summarizes the posting:

"Healthcare industry claims processors and claims-flow watchers report at least fourfold increases in rejected Medicare claims, similar or even higher rejection rate spikes for Medicaid claims, and a doubling of rejection rates for claims processed by Blues plans on May 23, the first day a federally mandated National Provider Identifier was required."

A senior VP at Emdeon states “We’re seeing a rejection rate of 24%,” ......By Emdeon’s analysis, this individual reports, this represents "$25.8 million in claims that were turned down, which compares with an average rejection rate of 6% or $10.6 million before May 23." Medicaid rates published by Emdeon are similarly high. The rejection rate is 26% compared to a normal rate of 4%. Blue Cross claims however, saw less of a spike according to this authority, jumping from 3% to 6%.

For Medicaid claims processed by Emdeon, the rejection rate on May 23 was 26% compared with a normal rate of 4%; and for Blues claims, 6% were rejected that day compared with a norm of 3%. An industry trade group spokesperson mentioned a 42- physician practice group in which only 12 of the 42 physicians could submit claims without them being rejected. Another spokesperson mentioned a "state Medicaid official who said claims flow had fallen from a normal 100,000 a day to less than 20,000."

What does this mean for our preparedness for health IT? Time and again, there seems to be a disconnect between federal thinking and results on the ground. This disconnect seems to happen even even when the thinking is very sound and accepted by the majority of stakeholders.

What does this mean for e-prescribing? Presumably, problems with a mandate - even with plenty of lead time - might be of a similar magnitude. These possible problems should not deter our industry from pursuing these goals, but it should reinforce our commitment to ensure that transitions are effective. Rejected claims mean money and when money is to be had, people find solutions. Problems with e-prescribing may mean at least a temporary access to medications for those who take these medications to prevent far more serious illness.

These "frightening" reports on NPI should stimulate the medication management industry to ensure that authentication is reliable, authorization is valid, and that the entire process among prescriber/refiller, dispenser, and consumer runs smoothly. We can ill afford stories on e-prescribing similar to the NPI anecdotes provided by Modern Healthcare

The May, 2008 CBO Report: Evidence on the Costs and Benefits of Health Information Technology (Publication number 2976).

• Follow this link to the CBO report.

The recently published report by the Congressional Budget Office summarizes well the dilemma faced by those who argue for adoption of health information technology based on formal analyses:

No aspect of health IT entails as much uncertainty as the magnitude of its potential benefits. Some analysts believe that the adoption of such systems could provide substantial savings by lowering the cost of providing health care, eliminating unnecessary health care services (such as duplicate diagnostic tests), and improving the quality of care in ways that might reduce costs (by diminishing the likelihood of adverse drug events, for example). Other analysts expect little effect on costs but some improve-No aspect of health IT entails as much uncertainty as the magnitude of its potential benefits. Some analysts believe that the adoption of such systems could provide substantial savings by lowering the cost of providing health care, eliminating unnecessary health care services (such as duplicate diagnostic tests), and improving the quality of care in ways that might reduce costs (by diminishing the likelihood of adverse drug events, for example). Other analysts expect little effect on costs but some improvement in the quality of care. Another school of thought holds that health IT could bolster the quality of care but also increase expenditures on health care services— because improvements in quality would stimulate demand for additional services.

Rand
CBO's critique of the RAND report is in part due to the difference in mission. RAND more or less measures an idealistic potential outcome. CBO must focus on the likely outcome and the true impact of Congressional intervention. Take gravity as an example. RAND would claim that the impact of a falling rock will depend on mass, resistance, and gravitational pull. CBO would claim that little Congress can do will impact the mass, the velocity, or the resistance. (CBO would perhaps explore the cost of measures mandating attaching a parachute to the rock and the resulting effect on impact.)The RAND research focused primarily on savings that the use of health IT could generate by reducing costs in physicians’ practices and hospitals and hence had a different scope. RAND also ignored neutral or negative reports. CBO questions their rationale for doing this.


The RAND analysis itself notes that its estimate is of health IT’s potential savings and costs depends on an optimal - but perhaps not likely - state : "We use the word potential to mean ‘assuming that interconnected and interoperable EMR systems are adopted widely and used effectively.’ Thus, our estimates of potential savings are not predictions of what will happen but of what could happen with HIT and appropriate changes in health care.”

RAND assumed a constant rate of adoption. CBO would assume the increasing rate of adoption currently observed. Since CBO's savings estimates are based in part on the extent to which legislation encourages adoption, savings due to adoption alone will be exaggerated by the RAND report relative to the CBO report.

RAND assumes that internal hospital costs are reduced to an extent proportional to hospital stay. That is, if the length of stay is reduced by 10%, so will the costs. Although this may be true for fixed costs (beds, personnel) as currently measured, the variable costs are unlikely to change significantly since in many respects throughput efficiencies are realized by performing the same tests and providing the same intensity of services as would have been provided anyway. If a patient is improving, variable costs of care decrease closer to discharge. If the patient is failing and subject to increasingly intense interventions in a effort to save a life, variable costs can be expected to increase until either death or clinical improvement ensues.

Savings incurred by replacing paper medical records with electronic health records exhibit the same dependency on fixed and variable costs. If an organization is large, changes in variable costs can translate to lower labor costs. If an organization is small - a solo practice, for example - personnel costs are essentially fixed and financial benefits are only realized if volume is increased and revenues are therefore enhanced using the same labor pool.

One criticism of the RAND study seems questionable to this reviewer. Using a traditional microeconomic argument, CBO assumes that lower costs will lead to lower prices and, consistent with economic theory, lower prices mean higher demand. This demand would offset some savings. It would be welcome news to see this theory play out where prescription drug adherence is concerned. Many reports suggest that individuals do not take beneficial cholesterol-lowering or other disease-prevention drugs in part because of the relative costs of these drugs; in general, rather than taking such medications monthly for a sometimes indefinite period, individuals take such drugs intermittently or cease taking them after several months. Here, lowered prices through greater efficiency may lead to greater adherence programs - particularly if other means of reminding and encouraging patients can be identified. But translating this to broader interventions is perhaps questionable.

CITL

The CITL study limited its scope to savings from achieving full interoperability of health IT, explicitly excluding potential improvements in efficiency within practices and hospitals. It essentially measured the long-term (15 year) savings when migrating from a theoretical state of complete paper to an equally theoretical state of idealized comprehensive use; it compares the potential savings from a bygone era with a Nirvana which may never be realized.

CBO echoes criticisms already made on unrealistically high estimates for laboratory administrative expenditures. It made equally generous assumptions about high degree of redundant test elimination. CITL, for example, assumed virtually all telephone costs would be eliminated from e-prescribing transactions

General Methodology

CBO helpfully distinguishes between the dynamic of savings incurred "internally" from those that are "externalities". They state:

• Internal savings are those that can be captured by the provider or hospital that purchases the system; they are most likely to be in the form of reductions in the cost of providing health care—that is, improvements in the efficiency with which providers and hospitals deliver care.
• External savings are those that the provider or hospital that purchases the system cannot realize but that accrue to another such provider or perhaps the relevant health insurance plan or even the patient. Such savings might arise, for example, from the newfound ability of participants in the health care sector to exchange information more efficiently.

CBO points out the relative maturity of internal cost savings examples within highly integrated delivery systems like Kaiser but emphasize the relative immaturity of knowledge where more disparate settings are incurred. They recognize that where health information exchanges are concerned, it is early in the game. They state "estimating the impact of some potential sources of savings, especially those arising from greater exchange of information among providers, insurers, and patients, is especially difficult because health IT networks are in an early stage of development."

Yet CBO does mention the positive effects. Their argument is one of degree. Among the areas in which savings may be realized are:

• Eliminating paper records. Savings are less if practices are small (i.e. high fixed personnel costs) or if systems are not used effectively.
• Reducing transcription services
• Avoidance of duplicate tests. Here the issues are those of actual availability of previous test results; awareness of the test results; and avoidance of revenues if providers have an incentive to repeat the tests. Most estimates of redundant tests are small. These may be larger if test results from a broader range of sites are available
• Reduction of radiology services. CBO suggests that most evidence supports the actual type of test ordered but little in the way of test reduction. (Our experience in Memphis suggests that some high-cost tests are reduced using a regional exchange).
• Prescription drug costs. Although CBO mentions lack of incentives, their most compelling argument is that because of "strong incentives," health plans and PBMs "may already be capturing a substantial portion of those savings."
• Improved productivity. Most studies are restricted to isolate roles and not to overall system productivity. Demonstrations of productivity are more compelling in some hospital environments than in ambulatory environments. Transcription costs can be reduced significantly.
• Reduction in hospital length of stay. CBO points out that slight reductions in length-of-stay are not commensurate with cost reductions. They also emphasize correctly that the current financial incentives for LOS reduction are sufficient to accelerate more effective adoption independent of legislative imperative. Adoption just makes good business sense.
• Quality. The connection between quality and EHR use remains conjectural but presents many long-term opportunities. One cannot improve what one does not measure so the extent to which one measures the right thing affords promise. CBO discounts the potential savings primarily because they are conferred upon patients and intermediaries rather than those who make the initial investment.
• Adverse drug events. CBO reviews the conflicting data on in-patient settings and the dearth of data on ambulatory settings. CBO recognizes that "avoiding even a fraction of the errors that now occur in inpatient and outpatient settings could yield significant savings" but claims that some of these errors may be addressed by current systems. One could argue, however, that although drug-drug interactions are common in pharmacy systems and there are multiple fail-safe mechanisms, comprehensive drug-disease, drug-allergy, and drug-lab interactions are in a relatively primitive state because of lack of standards (e.g., for allergies), lack of uniform clinical decision support mechanisms, and lack of widespread incorporation of these data in uniform ways.

Although lowering of administrative costs are mentioned in a systemic sense, CBO does not mention revenue cycle acceleration and coding accuracy - one of the principle drivers for some practitioners.

CBO brings into light the theoretical value of incorporating clinical decision support and evidence-practice into systems in a effort to improve quality on a systematic basis. Although results again are conflicting at this early stage, the potential seems intuitive.

The CBO report also emphasizes research and comparative effectiveness. The report states: "And some potential areas of research and analysis remain largely unexamined. They include the ways in which the delivery of health care services might change in response to the efficiencies that health IT offers and how the large amounts of clinical data available through EHRs could contribute to analyses of the comparative effectiveness and cost-effectiveness of different treatments." Similarly, public health reporting and disease surveillance are in their early stages; the potential is there but the jury is out.

Costs
CBO report also includes a good summary of costs incurred to incorporate health care technology into ambulatory practice. Total initial costs are said to range from $25 - $45 per physician; ongoing costs range from 12-20%. New subscription based systems may eliminate much of the up-front costs and lower annual operating costs. Smaller practices incur higher per practitioner costs. (Even ASP models will not lower the per-clinician training costs and the considerable practice transformation opportunity costs).

Explaining Low Rates of Adoption
The CBO Report poses many explanations. These include the significant investments in choosing and implementing systems, the lack of identifying measurable financial returns. Although the authors are skeptical of adoption based only on quality or revenue improvements, they suggest that physicians "might change their thinking if they knew that they would be directly compensated for implementing a health IT system or if they could report data on the quality of care that they provided—data for which they were being compensated— only by using such a system."

The CBO report mentions the "free rider" effect of support through intermediaries. Because technology should help practitioners provide care for al of their patients, once a technology is adopted, all intermediaries will benefit whether such intermediaries made an initial investment or not. Only uniform means of enforcing certain outcomes or performance measures would seem to provide an incentive for all intermediaries to participate. This degree of coordination should not be expected and may, in the eyes of some, be viewed as collusion."

CBO identifies two major roles played by the federal government. The first is as a payer; federal contributions to Medicare and Medicaid account for approximately 25% of the total American health car spend. The second role is as a market-maker. Health care may be a public good that cannot be optimally conferred without a federal-government that eliminates the "free-rider problem. Combined, federal roles provide a network effect that, properly managed, could create new opportunities for lower costs and higher clinical values. The returns - one could argue - are to society as a whole.

But the government is not neutral in all of this. By virtue of the CBO charge to examine the marginal benefit of federal intervention to accelerate a trend that is already underway, one has difficulty identifying those who really change their behavior on the basis of a federal incentive from those who would change their benefit anyway. If one wishes to subsidize motive rather than results, one must end with the treacherous logic that favors punishment over incentive. Indeed, the only way to make sure one is not providing a causative reward for uniquely good behavior is to avoid all rewards for good behavior and instead focus on punishing for undesired behavior. But this response is also flawed. One could argue that some who do not adopt technology do so for good reasons but all would be punished without respect to motive.

The CBO report provides an excellent summary of the current challenges in identifying the unique value of health information technology. Left with this conundrum, it is easy to fall into the trap of accelerating mandates and punitive schemes rather than accelerating the need to address the many unanswered questions raised by the current state of technology in health care. The CBO report plainly demonstrates that we do not yet understand how a federal effort can be ideally structured because we do not clearly understand the cause and effect of the various interventions. But the CBO does not refute an obvious conclusion: making this system work and moving from clearly confusing and possibly dangerous paper-based approaches is both essential and inevitable.

This is a report worth reading carefully. The CBO is to be congratulated for their public contribution.

In a talk delivered to the Markle Foundation Connecting for Health Steering Group on June 19, Dr. Blackford Middle noted the report gave a "reasonable review and summary of the literature on HIT value." Some CITL report aspects "were not represented well." These include:

• A fundamentally different purpose for the report - the impact of funding
• Value of un-standardized (level 3) vs standardized (level 4) interoperability
• They failed to note how CITL accounted for the current HIT context; CBO factored in existing provider-payer data exchanges, and existing lab and pharmacy integration
• CBO treated costs of providers information systems but inadequately treated the internal benefits; their notion of data exchange was relatively restricted.
• CITL differed with CBO on lab administration costs; phone call rates - but these were not key determinants of overall value
• CBO's critique did not discuss some of the limitations of HIEI model limiations. The CITL model was more expansive and included realizing savings through quality improvements and the potential clinical benefit.

In the same discussion Zoe Baird noted that it isn't so much the report as how it is depicted to the public. Initial reports were rather unitarian in the view declaring that benefits are not there. CBO - recruiting a broad and talented array of health care economists - has emphasized a broader and more constructive mesage.

Puerto Rico

Because of the close contest between two Democratic presidential candidates, something unusual is happening. For a few brief days, the eyes of the Nation will be turned on the Commonwealth of Puerto Rico. To some, Puerto Rico is an ancestral home; to others, it is a tourist destination; to those who help forge policy, it is a potential laboratory for health care reform.

Among the diverse states and territories constituting the United States, Puerto Rico is unique. Puerto Rico was ceded from Spain to the United States through the Treaty of Paris in 1898; it has governed through a formal civilian structure since the passage of the Foraker Act in 1900. Since the passage in 1917of the Jones-Shafroth Act the United States Congress has characterized the Commonwealth as an “organized but unincorporated” territory of the United States. Under this Act, residents were granted U.S. citizenship by statute and since that time have served in the United States military service. This Act affirmed a primary responsibility of the United States in maintaining control over economic, defense, and other basic governmental affairs and reiterates the United States Congress’s authority to overrule actions taken by the Commonwealth Legislature.

In 1947, the U.S. Congress approved a law allowing the election of the governor by the people of Puerto Rico. On July 3, 1950, the U.S. Congress passed the Puerto Rican Federal Relations Act. This law gave Puerto Rico the right to establish a government and a constitution for the internal administration of the Puerto Rico government and “on matters of purely local concern.

In 1993 most of the government’s health care facilities and services were sold and their management turned over to non-government entities generally under managed care arrangements. This far more decentralized system radically changed the Department of Public Health’s influence and authority in provisioning care services.

Although the impact on efficiency and quality is controversial there is some consensus on the unintended consequences of these moves. As is the case in the 50 states, the health care delivery could benefit from less fragmentation; it would provide more good if organizations providing preventive services, health promotion, and health maintenance were better coordinated; its diverse regions and communities require a better fit of health care services; it needs a stronger infrastructure for monitoring quality, financing health care services, improving outcomes, and providing consumers with greater empowerment and choices. It is, in a nutshell, facing the same challenges as those of the 50 states and other territories - but one can argue that its situation is even more acute.

Puerto Rico’s ability to combine local and federal financing for health care programs is hobbled by its unique relationship with the Federal government. In contrast to “incorporated territories” that may petition for statehood, the “unincorporated territory” of Puerto Rico is not subject to the Constitution’s Tax Uniformity Clause on all Federal duties, imposts, and excise. Although Puerto Ricans do pay import/export taxes, commodity taxes, and payroll taxes (Medicare, Social Security) most are not required to pay Federal income tax.

Although Puerto Ricans do not pay federal income tax, few would have a significant tax burden: the median household income in Puerto Rico is only 34% of the U.S median household income (2000 census) and less than half of that of citizens in the State of Mississippi.

While many health indicators in Puerto Rico are more ominous even than those published for Mississippi, in 2006 the latter state received 78.6% in federal support for every Medicaid dollar spent (the FMAP or federal matching assistance percentage), while Federal spending caps first initiated in 1968 have limited Puerto Rico’s matching percentage to an effective rate of 18%.

The 50 states can receive up to 90% reimbursement through Medicaid for critical health information technologies; Puerto Rico is not eligible for these supplements. According to 2005 Congressional testimony by Governor Anibal Acevedo-Vila, had FMAP been allowed to operate without the cap instead of the 18% effective rate of the previous year, the Commonwealth would have received $1.7 billion dollars in federal Medicaid support instead of the $219 million received. Translated to monthly amounts, federal Medicaid support in the states approximated $330 per month per participant; the amount in Puerto Rico was about $20 per month.

Funding and health care status are only a part of the obstacles Puerto Rico faces. Its health care delivery system, health care resources, and health care financing mechanisms have been said to have been in a state of decline since the introduction of managed care programs in the early 1990s. The hospital beds per capita in the Commonwealth are less than 2/3 the average across the 50 states; salaries for health care professionals of all types are lower and emigration to the 50 states is common. As vital care resources emigrate from the Commonwealth, some believe that a growing number of Puerto Rican residents needing chronic or long-term care will emigrate as well, shifting the financial burden for care to these same states.

It is within this context of controversy, internal dispute, and at times acrimonious dialogue with the Congress and Federal Executive Branch that Puerto Rico must navigate a course to health care reform. The creation, financing, and administration of such reforms very much depends on the perception – in Washington, among the Congress, and within the Commonwealth – on the rights and responsibilities of all parties within this historically unique and volatile relationship.

Puerto Rico's voice - and their subsequent actions - may say a lot about how other parts of the Nation can address similar urgent health care financing and delivery concerns.

Readings:

• U.S. Insular Areas : Multiple Factors Affect Federal Health Care Funding (GAO-06-75)
• Keith Bea, Congressional Research Service. Political Status of Puerto Rico: Background,Options, and Issues in the 109th Congress
• Puerto Rico Medicaid Reform Policy Initiatives 2005
• National Governors Association Policy Position EC-16 (7/24/2007)
  
• Governor Ancevedo-Villa's testimony: Senate Finance Committee, June 15, 2005. The Future of Medicaid: Strategies for Strengthening American’s Vital Safety Net