History of Health Information

Technology in the U.S.

Payment-Related Issues
and the Role of HIT
This material Comp5_Unit15 was developed by The University of Alabama Birmingham, funded by the Department of Health
and Human Services, Office of the National Coordinator for Health Information Technology under Award Number
1U24OC000023
Payment-Related Issues
and the Role of HIT
Learning Objectives
2
Discuss the historic incentives by payors
for the adoption of HIT by providers
Discuss direct and indirect ways in which
healthcare payors can influence the
adoption of HIT
Describe past and current strategies
employed by payors to influence HIT
adoption
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Third Party (Healthcare) Payors
Definition
An organization other than the patient (first
party) or health care provider (second party)
involved in the financing of personal health
services

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Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Misalignment of Incentives
Traditionally,
healthcare providers
(doctors and/or
hospitals) pay for HIT

-AND-

Payors typically benefit
financially

4
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Is that Fair?
Who should pay for health IT acquisition?
Doctors?
Hospitals?
Third parties/healthcare payors?
Largest third party payor: US government/
Medicare & Medicaid?

5
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payors Influence on HIT
Directly incentivize the need for HIT
Indirectly influence HIT adoption

6
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT


Directly Incentivizing HIT
Pay-for-Performance (P4P) Programs
Sponsored by payors
Aim to improve quality of care
Reward providers with incentives for achieving a
specified level of performance on one or more
measures
Outcome measures can include:
Clinical measures (e.g., immunization rates)
Efficiency measures (e.g., generic drug prescribing
rates, hospital admission rates)
Patient satisfaction

7
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT


Directly Incentivizing HIT
Many payors implementing P4P programs
Medicare offers P4P to hospitals
Most plans in 2006 offered P4P programs to MDs
Some programs target:
Specific diseases
Only high volume providers
All physicians and hospitals
Sizes of the incentives vary across programs


8
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT


Indirectly Influencing HIT
The concept of
payor generosity

9
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT


Payor Generosity
Medicaid (Government)
Generally considered least generous of the payors


10
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payor Generosity
Medicaid (Government)
Generally considered least generous of the payors
Medicare (Government)
More generous than Medicaid



11
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payor Generosity
Medicaid (Government)
Generally considered least generous of the payors
Medicare (Government)
More generous than Medicaid
Traditional Indemnity Insurers (e.g., BC/BS)
Most generous of the payor groups


12
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payor Generosity
Medicaid (Government)
Generally considered least generous of the payors
Medicare (Government)
More generous than Medicaid
Traditional Indemnity Insurers (e.g., BC/BS)
Most generous of the payor groups
Managed Care Organizations (e.g., HMOs)
Change incentives for providers by risk sharing and
lowering reimbursements relative to indemnity



13
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Indirectly Influencing HIT
HIT is expensive, so financial flexibility is needed
to invest in EHRs and other HIT systems

14
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payor Generosity and HIT
Study:
Hospitals with a large
number of privately
insured patients were
more likely to have
adopted HIT systems




Source: (Menachemi et al., 2007)



15
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payor Generosity and HIT
Study:
Physician with many
Medicaid patients were
less likely to adopt
EHR systems

Physicians with many
indemnity patients
were most likely to
adopt EHR systems


Source: (Menachemi.et al., 2007)

16
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Other Roles for Payors and HIT
Other than influencing HIT adoption,
payors can also enrich the data available
to providers in their EHRs
17
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Other Roles for Payors and HIT
Availability of Claims Data
Prescription drug history
Lab history
Radiology history
Doctor and hospital visits
Immunization history
Diagnosis detail

18
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT


Payors as HIE Leaders
Payors stand to gain financially when
providers use HIT
Especially when providers exchange patient
data among themselves

Payors have years and years worth of
claims data

19
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

HITECH Act and Other Initiatives
HITECH offers monetary incentives to hospitals and
clinicians who adopt and meaningfully use EHRs
Hospitals:
$2 million base rate plus an additional amount partly
based on the number of Medicare patients
Clinicians:
As much as $44,000 (through Medicare)
Or as much as $63,750 (through Medicaid)
Healthcare reform bill also encourages EHR adoption
Accountable Care Organizations

20
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT


Payment-Related Issues and
the Role of HIT
Summary
In this lecture, we discussed:
Historic incentives by payors for the
adoption of HIT by providers
Direct and indirect ways in which
healthcare payors can influence the
adoption of HIT
Past and current strategies employed by
payors to influence HIT adoption
21
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

Payment-Related Issues
and the Role of HIT
References
22
Health IT Workforce Curriculum
Version 3.0/Spring 2012
History of Health Information Technology in the U.S.
Payment-Related Issues and the Role of HIT

References
Menachemi N, Hikmet N, Bhattacherjee A, Chukmaitov A, Brooks RG. The effect of payer mix on the adoption of
information technologies by hospitals. Health Care Manage Rev. 2007; 32(2):102-10.
Menachemi N, Matthews MC, Ford EW, Brooks RG. The influence of payer mix on electronic health record
adoption by physicians. Health Care Manage Rev. 2007;32(2):111-118.

Images

Slides 4, 9, 14, 15, 16, 18: Clip Art. Available from: Microsoft clips online; Used with permission from Microsoft .