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The Push for Digital Records (But Questions Remain)
President Obama, the Stimulus Package, Reforming Health Care and IT Funding

The American Recovery and Reinvestment Act (the stimulus package) includes $20 billion in information technology (IT) funding. The goal is to move the U.S. health care system toward widespread adoption of IT systems such as the electronic medical record. The assumption is that broad implementation could save the U.S. $80 billion annually once completed. Currently, this is one of the first components in the President's overall focus on reducing the soaring cost of health care in the U.S.

The following conversation with Wendy Z. Goldstein, president and CEO, gives a brief overview of the plan's relevance to Lutheran HealthCare.

Q. How does information technology fit into the President's plan to reform health care?
In March, President Barack Obama convened a summit in Washington to identify programs that would improve quality and access to coverage and care while restraining burgeoning costs. He stated that all his policies would be based on rigorous scientific evidence of benefit. One of the mainstays of his proposal was the national adoption of electronic medical records. The administration believes boosting IT will save $80 billion a year, decrease medical errors, reduce malpractice lawsuits and greatly facilitate both preventive care and ongoing treatment of the chronically ill.

Q. Is this still just a proposal or is this now law?
The IT plan, called the Health Information Technology for Economic and Clinical Health Act (HITECH), was signed into law on February 17, as part of the federal stimulus package. HITECH provides $20 billion in federal investments to encourage hospitals and certain physicians to become "meaningful users" of certified electronic medical record (EMR) technology.

Q. What are the specifics of the Health Information Technology Act?
A. The basic plan calls for physicians, health care organizations, hospitals and health centers to adopt the widespread use of electronic medical records. While we applaud the President's plan and agree that increased use of information technology (in the form of electronic medical record systems) will certainly save us money in the long run, many millions will be needed to implement and maintain those systems.

Q. When do these systems have to be fully operational?
A. The President has called for health care institutions to have a "meaningful" electronic medical records system in place by 2011. There are still many questions to be answered and specifics as to what a "meaningful" system means, but we do know that the Centers for Medicare & Medicaid Services (CMS) will have a very real set of items and qualifications we must meet to qualify.

Q. Are there incentives or penalties of which we should be aware?
A. Yes. Since the $20 billion in IT spending will largely be funneled through the Centers for Medicare & Medicaid Services (CMS), they are providing both incentives and penalties that will certainly impact health care organizations. There are specific incentives for universal EMR adoption. The stimulus package allows for $2 billion in discretionary health IT funding and $18 billion for the incentives through Medicare and Medicaid reimbursements. Under the terms of the bill, beginning in 2011, organizations will begin to receive an increase in their reimbursement rates through Medicare and Medicaid payment add-ons. These add-ons will be temporary and only for those adopting working EMR systems. Conversely, if a facility is not computerized by 2015 it will be penalized.

Q. Overall, where does Lutheran stand now in the adoption of electronic medical records?
A. This is good news for facilities like Lutheran, which recognize the importance of electronic medical records. The health centers, using the eClinicalWorks system, are fully operational, and the medical center, using Medsphere's OpenVista technology, is in the process of implementing its system. Since the President's package includes incentives, and more importantly penalties, we believe that everyone will have to adopt electronic records fully. Although we are ahead of the curve (a recent New England Journal of Medicine study found that less than 2 percent of hospitals use EMRs in all departments and that 17 percent of doctors have functional systems), we still need to pay for IT implementation and training upfront. The plan's incentives only call for extra funding to those who have a certified EMR system in place over a four-year period, between 2011 and 2015.

Q. How will the potential incentives benefit Lutheran?
We feel very strongly about the two systems we have adopted at Lutheran. Both were the wisest choice for budget minded institutions. When fully operational, and after several years of support through the Health Information Technology for Economic and Clinical Health Act, we expect our EMR systems to save us money through efficiencies created with the new way of doing business electronically. These savings will help offset the costs of ongoing operational expenses for IT such as training and hiring new staff to manage the system. Furthermore, we anticipate that we will have a "meaningful" system in place that meets CMS requirements by October 2011 and look forward to seeing an increase in Medicare and Medicaid reimbursements at that time. Estimates suggest that we could receive approximately $13 million over 4 years in these temporary add-ons ($7 million through Medicare and $6 million through Medicaid).

Q. So what is the bottom line?
A. We agree that the President's IT initiative will improve patient safety and greatly facilitate both preventive care and ongoing therapy of the chronically ill. Furthermore, we anticipate that we will have a "meaningful" system in place that meets CMS requirements by October 2011 and look forward to the increased efficiencies in the delivery of health care that electronic health data and records will afford.

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