Will Medicaid take full advantage of HITECH funding—or not?

Will funding from the Health Information Technology for Economic and Clinical Health (HITECH) Act, part of the American Recovery and Reinvestment Act (ARRA), propel state Medicaid programs forward with the use of electronic health records (EHRs)? Or will state fiscal crises or other unforeseen problems prevent the hoped-for progress?

The answer probably is a little of both, but efforts are redoubling now that the Centers for Medicare & Medicaid Services (CMS) actually is releasing funds to Medicaid programs.

The HITECH funding "provides momentous opportunities, significant funding, immense expectations, tight time frames, and huge financial and human resource demands on state Medicaid programs, CMS, and Medicaid providers," says Patricia MacTaggart, a lead research scientist/lecturer at George Washington University's Department of Health Policy in Washington, DC. "The potential is great for real transformation in health care, health care delivery, and health care administration."

There is 90% federal funding for administrative activities, including oversight and promotion of health information exchange, and 100% federal funding for provider incentives. However, for providers to get incentive payments in 2010 for adopting, implementing, and upgrading certified EHR technology, states must have a process and infrastructure for administering and disbursing the incentive payments to Medicaid providers. At the same time, duplication of payments made through Medicare must be avoided.

'Meaningful use'

States are now sorting through the Office of the National Coordinator's Interim Final Regulation relating to HIT standards, implementation specifications, and certification criteria, and CMS' proposed rule on the Electronic Health Record Incentive Program for Medicare and Medicaid programs, often referred to as the "meaningful use" Notice of Proposed Rulemaking.

"They are identifying and clarifying numerous governance, legal, policy, technical, and business process complexities, while educating their stakeholders, including governors, state legislators and their own staff, on what must be done, by when, and how many state dollars will be needed," says Ms. MacTaggart. "They are balancing doing it quickly with doing it well, and they are doing it with limited staff in an economic environment that is stretched."

As for the proposed meaningful use regulation, Ms. MacTaggart says CMS "did a great job of clarifying many things and requesting comments on areas where there is more than one option being considered."

It will be important for states and providers to review the proposed language, understand the terminology, and comment on feasibility related to operational issues, time lines, and interdependencies with other regulations and activities. These include certification and standards of EHRs, and the commonalities and differences between Medicare and Medicaid.

For instance, the "payment year" for eligible hospitals refers to the federal fiscal year, but the payment year for eligible professionals is the calendar year for both Medicaid and Medicare. "For Medicare, the second payment year is the second year of meaningful use, while for Medicaid it can be the first year of meaningful use following one year of adoption, implementing, or upgrade of certified EHR technology," adds Ms. MacTaggart.

Ms. MacTaggart says "the best potential for real change that is sustainable" is through the use of HIT, with Medicaid either leading or playing a critical role. "This is a rare opportunity to work interstate as well as intrastate to develop, design, and implement a framework that supports the policy goals, rather than adjust the policy goals to work within the infrastructure available," she says.

For example, instead of fixing 50 state eligibility systems one at a time, or creating "workarounds" to accommodate their individual failings, Ms. MacTaggart says "we can get together, state and federal, and create an eligibility system that can support health care reform demands for all states. This results in immediate standardization of a data source and paying for it once rather than 50 times."

Georgia Medicaid is currently working on getting systems in place to keep track of who is getting incentive payments, whether providers are using a certified EHR system, and whether they are complying with the federal meaningful use definition, reports Rhonda M. Medows, MD, FAAFP, commissioner of the Georgia Department of Community Health (DCH).

At the same time, a reimbursement method needs to be developed to pay providers the appropriate incentives. "Once there is a system in place, providers will get a higher Medicaid rate, which is excellent. Financing someone to do something definitely is a strong motivator to get them to do it," says Dr. Medows. "But, it means our claims system has to be able to incorporate a higher payment for them."

No silos for Medicaid

Dr. Medows says she thinks the biggest challenge involving HIT and Medicaid at this juncture is "to make sure we don't allow ourselves to silo things. The whole definition of HIE, after all, is that information is getting exchanged."

For state Medicaid programs, Dr. Medows says that the challenges are in large part "the same as you see at the national level, of getting providers as well as plans to see the value in the short term and in the long term, for having HIEs and using EHRs, as well as e-prescribing and other tools for communicating."

A large push was made to keep Georgia Medicaid providers apprised of all of the various grant opportunities, so they don't miss out. "We have made an incredible effort to notify all of the 40,000 physicians in the state of Georgia every step of the way. We have kept them up to speed with advisory meetings, web sites, and e-mails," says Dr. Medows. "We make sure that they know there are incentives, but there is also the possibility of reduced reimbursement if they are not on board."

According to Rod Prior, MD, Maine's Medicaid medical director, the planning funds from CMS "provide a great opportunity to improve Maine state government's own HIT systems. Previous and impending funding cutbacks in the Maine state government budget have sharply limited our ability to invest in long-range planning and strategic system development," he says.

Maine's Department of Health and Human Services has submitted a preliminary Advance Planning Document to CMS to set up a planning team for HIT systems over the next one, two, and five years.

Currently, an HIE called Health InfoNet is being piloted. The system connects Maine's major hospitals, most public health immunization records, pharmacy data, and one integrated delivery network of primary care, all made possible through HITECH funding.

"We became operational last summer. This HIE will be the foundation of an effort to spread or expand the capacity to reach all providers in the state," says Jim Leonard, program manager of the Maine Quality Forum in Augusta and interim director of the Office of the Coordinator for HIT. "Within the next four years, we are certainly hoping to have the whole primary care system connected."

As the ARRA funds need to be committed by March 2010, "a number of new funding opportunities have been released simultaneously and are due back to the Office of the National Coordinator quickly," he says. "There is also funding to provide regional extension centers to provide direct support to practices that are needing help, particularly those practices which will be delivering services to the underserved population—what would be called the safety net providers. This is where a lot of the Medicaid population is actually served."

In terms of where he expects HIT will make an impact on Medicaid, Mr. Leonard notes that as the average age of the Medicaid population is relatively young compared to populations that are commercially insured, "one thing that becomes important is services to children." Another possible opportunity for Maine Medicaid involves working with a state university to develop an approach to use new clinical measures recently developed by the Agency for Healthcare Research and Quality to improve care of children. A related goal is incorporating Bright Futures, a set of quality measures related to kids with developmental issues.

Another one of Maine Medicaid's HIT goals is better management of people with chronic diseases. "We did one study that showed that the proportion of diabetes in the Medicaid population was about 7%, higher than the statewide average. That is unusual, as it's a younger population," Mr. Leonard says. "The cost was 14% of the overall cost. So, you had a portion of the population that was twice as costly as the statewide average."

When will cost savings come?

While HIT alone can't address the current budget shortfalls states are facing, it is an important component in making health care delivery more efficient. In Arizona's case, Perry Yastrov, project director of EHR Systems and Services for Arizona Health Care Cost Containment System, the state's Medicaid program, says, "The state faces one of the biggest deficits in the United States. HIT has the ability to help in the long run but will not be able to provide savings for the immediate crisis."

Robert L. Robinson, PhD, executive director of Mississippi Medicaid, says that the program's biggest challenges right now are "an increasing number of eligibles, increased medical costs, and decrease in funding due to shortfalls in our state's budget." Currently, the Division of Medicaid is wrapping up the initial pilot of its electronic prescribing program, which targeted about 250 providers.

In addition, the Division of Medicaid will roll out a new EHR/e-prescribing solution statewide in April 2010. "We anticipate the HITECH incentives to provide additional momentum towards widespread e-prescribing adoption," Dr. Robinson says.

The program provides point-of-care access to critical drug information, interaction screening tools, current medication histories, preferred drug lists, and clinical decision support tools. Here are results seen by Mississippi Medicaid a year after the e-prescribing program was implemented:

—more than $1.2 million a month was saved in prescription drug costs;

—about $922,000 in hospital costs was saved from the system's "high" and "very high" drug interaction alerts;

—more than $14.4 million was saved, due to the ability to prescribe fewer and less costly medications.

Dr. Medows predicts that HIT will eventually result in cost savings for Georgia's Medicaid program, but she says the primary focus right now is care delivery. "There is an assumption that if you give treatment that is effective the first time, you basically avoid complications from delaying care or duplicating tests," she says. "So, there is an intuitive sense there would be a cost savings. But our ultimate focus is on bringing health care delivery up to 21st century standards. This is an amazing communication tool that every other industry uses. We have not taken full advantage of it yet."

Contact Dr. Medows at (404) 657-9118, Mr. Leonard at (207) 287-9965 or James.F.Leonard@maine.gov, Ms. MacTaggart at (202) 994-4227 or Patricia.MacTaggart@gwumc.edu, Dr. Robinson at (601) 359-9562, and Mr. Yastrov at (602) 417-6970 or Perry.Yastrov@azahcccs.gov.