Wednesday, July 20, 2005
Setting the Context
While other industries like shipping, retail, and banking have successfully transformed the way they do business through the use of information technology, the health care industry's use of information technology has lagged. Furthermore, the productivity of the health care sector in the U.S. has failed to keep pace with its spending.
While much of this spending is unavoidable, the current system is saturated with inefficiency. In fact, economists believe that up to a third of health care spending – more than half a trillion dollars a year – is wasted because of poor or redundant care or other problems.
And it's not just a matter of dollars – it's a matter of human lives. The Institute of Medicine has estimated that medical errors are responsible for the deaths of 44,000 to 98,000 Americans every year in hospitals. The information necessary for clinicians to treat their patients is often missing at the point of care. Our nation is facing an economic and humanitarian imperative in health care– we must become more efficient or face losing our economic prosperity and precious human lives.
Nothing short of transformation of our health care system will do. What are the big gears of health care transformation? I think there are three.
Perhaps the biggest gear is a change in the way we think about health care. When I was Administrator of EPA, I learned that it is much easier and less costly to prevent pollution than to clean it up. The same principle can be applied to health care. We need to become a society who thinks of staying healthy rather than simply being treated after we're sick. That is the reason the President fought so hard for a prescription drug benefit and other preventive benefits for seniors. That is the reason he is pressing hard for progress on obesity and emphasizing the importance of exercise and eating healthy. These lifestyle changes help prevent the onset of chronic diseases, such as Type 2 diabetes and heart disease. An increasing amount of our total health care costs as a nation are from preventable and manageable chronic diseases.
The second big gear is realigning health care incentives. The incentives in our health care system are just wrong - wrong for providers, wrong for payers, wrong for patients. Providers get paid on the basis of the quantity of the care they provide, not the quality of outcomes. Until this changes, we cannot transform health care. I am determined to see pay-for-performance become part of the way we compensate health care providers. We are already starting to implement these changes in the Medicare program. For example, the Medicare Care Management Performance Demonstration (MMA section 649) is a three-year pay-for-performance demonstration involving physicians to promote the adoption and use of health information technology to improve the quality of patient care for chronically ill Medicare patients. Doctors who meet or exceed performance standards established by CMS in clinical delivery systems and patient outcomes will receive bonus payments for managing the care of eligible Medicare beneficiaries. This demonstration, which is currently under development, is focused on small and medium-sized physician practices. It will be implemented in four states: Arkansas, California, Massachusetts, and Utah, with the support of the Quality Improvement Organizations in those states.
Likewise, current consumer incentives are counterproductive. If a person is sent into a store and told they can buy all they want and the price doesn't matter, the outcome is predictable. Too often, that's how our health care system works. Transformation will not occur until we change these incentives. That is why the President feels so passionately about tax-free health savings accounts [HSAs]. Owners of HSAs have an incentive to become more cost-conscious consumers of health care.
The third big gear is the widespread adoption of interoperable health information technology. Health information technology is a tool which holds much promise for improving the quality of care Americans receive by preventing medical errors, providing clinicians with better clinical decision-making tools, sharing information with other clinicians involved with the treatment of their patients, tracking health outcomes and coordinating public health activities. While improving the quality of care Americans receive is important, health information technology can also lead to cost savings, through better coordination of care, information sharing, reducing redundancies, and preventing errors.
Last year, the President made the use of health information technology a key principle of his health care agenda. On April 27, 2004, the President signed Executive Order 13335 (EO) announcing his commitment to the promotion of health information technology to lower costs, reduce medical errors, improve quality of care, and provide better information for patients and physicians. In particular, the President called for widespread adoption of interoperable electronic health records (EHRs) within 10 years so that health information will follow patients throughout their care in a seamless and secure manner. This means that their medical information is available to the right people at the right time, while remaining protected and secure. The President has tasked HHS with making this vision a reality by 2014. The goal can be met, but there are major challenges to be faced, and the path forward requires a concentrated nationwide effort to achieve widespread adoption of interoperable EHRs.
This Administration's commitment is clear. HHS will spend $85 million on health IT in FY05, and President Bush has requested another $125 million for health IT in FY06. This commitment will support the foundational work of the Office of the National Coordinator for Health Information Technology and the Agency for Healthcare Research and Quality that is required to achieve the President's goals in 10 years.
The Adoption Gap:
The spirit of the transcontinental railroad is alive in health IT. People want to build it, and there is a sense of urgency. We are spending lots of time building elaborate railcars, but not enough in lining up the tracks. It is the power of a competitive free market that will make this happen, and we are blessed to have innovators and entrepreneurs that are capable of making miracles happen. But the promise of health IT will only be realized when all this power is channeled into creating a standardized system that is open, adaptable, interoperable, and predictable.
HHS is taking advantage of the current low adoption rate for EHRs, and putting the goal of interoperability forward first. When interoperability is in place, EHR adoption will follow.
The Path Forward
It has become clear that the challenge of health IT interoperability is a compelling national problem and that it will require an extraordinary measure to achieve it. It requires a sustained effort that goes beyond a private effort—and, beyond a federal effort. This requires a nationwide effort, harnessing the best of every sector.
In an effort to channel this momentum and continue toward meeting the President's goal, I am forming a national collaboration to dramatically intensify the pace of progress in health information technology. On July 14, 2005 I published a notice in the Federal Register to create the American Health Information Community (the Community). This body will be tasked with helping the nation transition to electronic health records – including common standards and interoperability – in a smooth, market-led way. The President intends the Community to be the place where major government players and private sector interests unify behind a common framework achieving interoperability. The Community will be an open, transparent and inclusive collaboration involving the critical mass necessary to get things done.
The Community, which will be formed using the procedures of the Federal Advisory Committee Act, will provide input and recommendations to HHS on how to make health records digital and interoperable, while assuring the privacy and security of those records remain protected. The Community is being chartered for two years, with the option to renew for a duration of no more than five years. It is my intention that the Community be succeeded within five years by a private-sector health information community initiative that, among other things, would set additional needed standards, certify new health information technology, and provide long-term governance for health care transformation.
The Committee will not exceed 17 voting members, including the chairperson. It will consist of nine members from the public sector and eight members from the private sector. Public Sector members will be drawn from Department of Health and Human Services (including the Office of the Secretary, the Centers for Medicare and Medicaid Services, and the Public Health Service), Department of Veterans Affairs, Department of Defense, Department of Commerce, Department of the Treasury, Office of Personnel Management, and a State government. The private sector membership will be drawn from purchasers, third-party payers, hospitals, physicians, nurses, ancillary services (e.g., lab or pharmacy), consumer and privacy interests, and health information technology. This is of such importance to the transformation of health care in America that I have concluded that, as Secretary of Health and Human Services, I should serve as the Community's first chairman. Nominations for the Community are due August 5, 2005.
The Community will start by building on the vast amount of standardization already achieved inside and outside the healthcare industry. Specifically, the Community will:
1) Make recommendations on how to maintain appropriate and effective privacy and security protections.
2) Identify and make recommendations for prioritizing health information technology achievements that will provide immediate benefits to consumers of health care (e.g., drug safety, lab results, bio-terrorism surveillance, etc.).
3) Make recommendations regarding the ongoing harmonization of industry-wide health IT standards and a separate product certification and inspection process.
4) Make recommendations for a nationwide architecture that uses the Internet to share health information in a secure and timely manner.
5) Make recommendations on how the AHIC can be succeeded by a private-sector health information community initiative within five years. (The sunset of the AHIC, after no more than five years, will be written into the charter.)
Furthermore, I have also issued four requests for proposals (RFPs). The products of these contracts will, in part, serve as inputs for the AHIC's consideration. We expect to award contracts for these RFPs in September 2005. Specifically, the RFPs will focus on four major areas:
Other Health IT Initiatives Underway
A critical piece in nationwide adoption of e-prescribing is the promulgation of the MMA mandated exception to the physician self-referral statute [the Stark provision] and the safe harbor to the anti-kickback statute, which would enable hospitals, group practices, Prescription Drug Plan sponsors and Medicare Advantage organizations to donate software to physicians and other providers for use in e-prescribing. We plan to issue proposed regulations for the physician self-referral exception and for the safe harbor to the anti-kickback statute very soon.
Efforts at the Agency for Health Research and Quality (AHRQ)
Reflecting a commitment of $139 million over five years, these awards were truly nationwide in scope. They spanned 43 states, with over half of the projects based in rural and small hospitals and clinics. In combination, these community-based health care institutions provide health care to more than 40 million Americans.
Last Revised: July 20, 2005