Medicaid preparing for HIT investments available through ARRA

As federal funds are beginning to flow to state Medicaid programs for Health Information Technology (HIT) planning, there is an unprecedented opportunity for care system transformation. While it's not a "given" that all states will apply for the funding, they are exploring a variety of options to maximize their access.

Activities under way are reported in a Center for Health Care Strategies (CHCS) policy brief, "Electronic Health Record Incentive Programs for Medicaid Providers: How Are States Preparing?" based on interviews with Medicaid leaders in six states looking to optimize HIT expansion in Medicaid.

"Many states, for example, are seeking legislative funding for new state positions or for contracts with external entities such as universities or QIOs, to design, administer, and oversee the provider incentive program," says Dianne Hasselman, director of quality and equality at CHCS.

As more states receive the "green light" from the Centers for Medicare & Medicaid Services (CMS) on their HIT Planning Advance Planning Documents, this is allowing states to focus on the design of electronic health record (EHR) incentive programs for eligible Medicaid providers. Ms. Hasselman says Medicaid agencies should perform these actions right now:

• Review CMS' proposed rules for demonstrating meaningful use through an EHR provider incentive program, considering related implications for their programs, as well as alternative requirements that better reflect the unique needs of Medicaid and its providers.

• Identify high-volume Medicaid providers who would be eligible for the incentive program, and reach out to them about the opportunities available through the American Recovery and Reinvestment Act (ARRA) of 2009.

• Engage their provider networks to get a better understanding of technology use among high-volume Medicaid practices, available and lacking resources, and the supports the practices will need to achieve meaningful use.

• Partner with health plans, regional extension centers, regional public-private alliances, and medical societies, all of whom will be critical partners to the state and its provider network.

• Look for ways to align their quality improvement initiatives with the directions in which the Office of the National Coordinator (ONC) for HIT and CMS appear to be going in the proposed rules.

Ms. Hasselman notes a number of obstacles to accessing these finds. Financing is one of the biggest. "CMS is offering states significant resources to transform the quality of primary care delivery through investments in HIT. Despite the promise of a 90% federal funding match, however, many states are encountering challenges in finding the 10% match, given their severe budget deficits," she says. "Therefore, their first step is to try to secure state matching funds."

"If states can't find the 10% matching funds for HIT planning and expansion, that's an issue right out of the gate," says Ms. Hasselman. "States are exploring with CMS the feasibility of including in-kind services in the 10% match or asking local foundations for funding."

Ms. Hasselman says that states should be thinking "holistically" about how HIT affects their Medicaid program. For example, states can begin moving toward HIT functionality and clinical measurement in provider-level, pay-for-performance programs. Also, they can partner with select providers to do a "dry run" of core measures to explore whether they can achieve meaningful use and, if not, what barriers are encountered.

Medicaid programs with risk-based managed care organizations should be thinking strategically about how to leverage health plan resources. For example, plans can play a significant role in implementing provider EHR incentive programs, identifying high-volume Medicaid practices, engaging their networks, connecting practices to regional health information exchanges (HIEs), and providing training, education, and technical assistance to their networks.

"As Medicaid programs think about leveraging these resources, they should be designing strategies using a 'plan-agnostic' approach," says Ms. Hasselman. "As we know, a primary care practice typically contracts with multiple plans. If each plan approaches the practice separately with different performance measures, incentives, and informational materials, the practice could become overwhelmed and potentially more skeptical about this opportunity."

In light of this, states should be challenging plans more and more to adopt a unified approach, particularly around quality improvement activities, when working with common practices.

Provider engagement

Many states are finding it difficult to identify eligible Medicaid providers, says Ms. Hasselman. Medicaid providers, especially small practices, may feel disenfranchised, isolated, and "left behind" with the HIT movement.

"Connecting with these providers and creating champions for meaningful use will be critical to the success of a provider incentive program," says Ms. Hasselman. "Otherwise, there is a concern that 'no one will come to the party,' particularly after states had made significant investments in developing the programs."

For this reason, it's of the utmost importance for Medicaid to actively engage its provider network now. The goal is to ensure that providers—particularly small, underresourced practices serving a large volume of Medicaid patients — understand the value of this opportunity and how the state and its partners will support them through the process.

In addition, given the budgetary crisis, staffing shortages, and many other competing interests, such as potential health care reform and coverage expansions, some states are finding that they must prioritize certain health care reform opportunities over others.

"As such, states may be at risk of missing the enormous opportunity presented by HIT expansion if they are forced to prioritize one effort over another due to resource shortages," says Ms. Hasselman. "Hopefully, federal funding and strong collaborations with other stakeholders, such as regional public-private alliances, will ease this concern by creating economies of scale and other advantages."

Bigger opportunities

Ms. Hasselman says that as the largest purchaser of health care in this country in terms of covered lives, Medicaid has an enormous opportunity to leverage its purchasing power in various ways to maximize the impact of federal funding.

"Each state can use this opportunity to create greater alignment across its HIT expansion activities, QI initiatives, performance measures, and payment reform efforts," she urges. Equally important is ensuring that Medicaid's data, leaders, QI initiatives, and provider network are represented in regional public-private alliances that also are working to improve quality of care throughout communities.

Overall, there is a recognition among states that this is an unprecedented opportunity to improve the quality of care for Medicaid beneficiaries. For instance, HIT expansion will enable states to create quality reporting tools that provide timely feedback about care gaps, missed opportunities, and disparities in care.

Medicaid resources could potentially be shifted from conducting chart reviews and audits to implementing innovative ambulatory QI projects. "With increased access to this rich source of clinical information, Medicaid programs will have significant new tools to better manage the health care needs of low-income and diverse populations," says Ms. Hasselman. "States should consider the new roles and capabilities they will have three to five years down the road, and position themselves accordingly to gain or develop the necessary skill set."

Tremendous potential

George L. Oestreich, PharmD, MPA, deputy division director of clinical services for the MO HealthNet Division of Missouri's Department of Social Services, says that both HIT and HIEs hold "tremendous potential" for the state's Medicaid program.

"A statewide system for securely moving health information can deliver improved medical decision-making, accountability and privacy, reduce medical costs, errors and duplication, and empower Missourians," says Dr. Oestreich. "MO HealthNet, and the state as a whole, will benefit from those improvements. Missouri has an unprecedented opportunity to transform the way medicine is practiced in the state."

One of the primary challenges for Missouri's Medicaid program, however, is developing the technical infrastructure needed to get computers at doctors' offices and hospitals around the state talking to each other. "Those same challenges will apply to MO HealthNet, but the early involvement and leadership of state Medicaid staff will help achieve integration of the program into the state's information exchange," says Dr. Oestreich.

Missouri has received notice of $13.8 million in federal funding to help health care professionals adopt EHRs and share health information electronically among providers. The Missouri Health Information Technology Project, created in November 2009, is tasked with developing a strategic and operational plan for implementing HIE in the state. Missouri's ability to draw down the federal funds is contingent on this public-private collaboration's ability to meet defined goals. The state's goal is to develop the infrastructure to enable the system between 2010 and 2015, with widespread adoption of EHRs by 2015.

William Streur, deputy commissioner of Alaska Medicaid and Health Care Policy, says while funding is always a concern, it is "not our greatest concern. Recognition by CMS and ONC of the complexity of HIT development with the significant geographic challenges we face may be. I also believe our geographic separation from the rest of the nation, like Hawaii, presents challenges in developing cooperative relationships for HIT/HIE with other states."

However, Mr. Streur adds that "the majority of providers have aligned themselves with us to work on a single statewide effort, and groups are coming together to take a look at what we can do to long-term fund this effort."

Pooling resources

Lynn O'Mara, MBA, HIT project manager for Nevada's Department of Health and Human Services, says that one of the biggest challenges for Medicaid is to work together with other agencies in order to accomplish HIE.

"It's a puzzle with a lot of pieces to put together. States are required to have a strategic plan. Nevada is one of a handful of states that does not have one, and we are going to have to do one," reports Ms. O'Mara. "As part of the process, Medicaid's required HIT strategic plan and road map must be coordinated and integrated with the mandated statewide plans." Nevada's HIT Blue Ribbon task force has key stakeholders, including the state Medicaid director, working on this type of coordination.

One goal is to identify overlapping activities required for developing the strategic plans. "We are hoping to be able to pool our funding resources for those efforts and use the funds in a productive way to accomplish what we have to do," says Ms. O'Mara. "For example, for the state plan, I need to know what the specific Medicaid HIT requirements are. If we can do work together on related activities, it would be a real boon."

Ms. O'Mara says the willingness of early adopter states to share their experience with establishing the necessary infrastructure for HIT is a tremendous help. For example, some states have shared lessons learned through the National Governor's Association's State Alliance for e-Health. "Other states may be having the same problems, or may have different approaches that can be considered. Because of those lessons learned, more options are starting to surface, which is good. You have to figure out which of those is going to work for your state," she says.

States will also need to look at ways to exchange information across state lines. For example, while some residents live and work in Laughlin, NV, they may see doctors and use the hospital across the border in Bullhead City, AZ. The hospital and those physicians will need to be able to access the patient's medical records.

"And independent of that, you also have the veterans, the military, and tribal systems. They all have to work together," says Ms. O'Mara. "The ARRA funding requires a very tight timeline for implementation, which is a challenge. We want to do the best job possible, as this could have a significant impact on costs, depending on the success of our implementation. Everyone is convinced of the benefits. However, to maximize those impacts, we need to do in the right way."

Ms. O'Mara says she expects to see more multistate collaboration in the near future. "The current economic situation is a challenge for all states as they implement HIT. If states work together, resources can be pooled and hopefully more can be accomplished," she says. "For example, there may be a new business model of interest to several states. By working together, they can get the necessary infrastructure in place more quickly and resolve any problems that would interfere with interstate health information exchange."

Contact Ms. Hasselman at (609) 528-8400 or, Dr. Oestreich at (573) 751-6961 or, Ms. O'Mara at (775) 684-4005 or, and Mr. Steuer at or (907) 334-2520.