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July 22, 2009

Opening Doors
By Selena Chavis
For The Record
Vol. 21 No. 14 P. 20

Recent exemptions and safe harbors added to federal Stark and antikickback laws are expected to spur EHR adoption among physicians.

The digital revolution has been somewhat of a catch-22 for many physicians. Most acknowledge the benefits of EHRs and the ever-expanding realm of HIT, but making the transition from paper to keyboard has been cost prohibitive, leaving the national movement in a state of “hurry and wait” as many independent physicians lag behind in adoption.

In 2006, the federal government realized a way to leverage the resources of the private sector to provide a way around the prohibitive nature of the Stark law and Antikickback statute, both of which were previously too narrow in focus to allow physicians to receive financial support from hospitals and other healthcare entities that could help fund EHR adoption and implementation.

“Based on the informatics literature, the initial implementation cost of an EHR for private practices averages between $40,000 and $60,000 per provider, and the cost of maintenance averages $5,000 to $10,000 per provider per year,” says John D. Halamka, MD, MS, chief information officer (CIO) of the CareGroup Healthcare System and CIO and dean for technology at Harvard Medical School, who adds that recent data collected by National Coordinator for Health Information Technology David Blumenthal, MD, MPP, concludes that only 4% of clinicians in the United States have high-level use associated with an EHR. That is, they would use an EHR for functions such as regularly updating a problem list, creating an electronic note for each encounter, and performing all medication management (e-prescribing, medication reconciliation, allergy documentation) electronically.

“There are many reasons for implementing electronic health records: enhancing quality, clinical integration, reducing redundant testing, and building workflow efficiency with technologies such as e-prescribing,” Halamka says. “Unless our clinicians have a consistent way to record this data, quality and pay-for-performance reporting will be impossible, since clinicians would implement their own unique ways of recording problems, medications, allergies, and notes.”

Specifically, the Stark law prohibits physicians from referring a Medicare patient to an entity for certain designated health services, including inpatient and outpatient hospital services, if the physician has a financial relationship with the entity, unless an exception applies. The Antikickback statute broadly prohibits either directly or indirectly giving, receiving, offering, or soliciting payment for referrals.

On August 8, 2006, Health and Human Services and the Centers for Medicare & Medicaid Services established a new Stark exception and Antikickback safe harbor that enables hospitals and other potential healthcare entities to donate up to 85% of the cost of an EHR to physicians up until the year 2014. Many healthcare organizations and networks of all sizes are now leveraging this relaxation of the rule to get physicians on board. By making it easier to connect to the day-to-day workings of a hospital entity, healthcare facilities ultimately improve workflow for physicians and effectively align themselves with the physician community.

A Very Different Project
That’s how Halamka describes the effort at Beth Israel Deaconess Medical Center, a teaching hospital of Harvard Medical School, to implement a large hosting facility offering Web-based EHRs for 300 private physicians in New England.

“Since 2002, my IT teams have provided electronic health records to every owned/closely affiliated clinician of Beth Israel Deaconess using our home-built webOMR software. We even had a medical executive committee policy mandating the use of electronic health records for owned clinicians by July 30, 2008,” he notes. “This was a very different project than providing applications and infrastructure to owned clinicians, who we manage, on a network, which we manage.”

The effort kicked off in early 2008, and the go-live occurred that summer. Planning for the endeavor was built around 10 issues: governance, cost modeling, planning for distributed users, managing the project, creating a scalable infrastructure, staffing, creating a model office, funding, implementation, and support.

In regard to governance, Halamka suggests that the needs of many stakeholders must be balanced to ensure the success of this type of endeavor. “The hospital wants to support as many clinicians as possible using its capital budgets most efficiently. Community clinicians want to minimize the financial and operational impact of the project on their practice,” he says. “IT staff must manage their hospital-based projects and infrastructure while expanding their scope to new off-site locations.”

Recognizing the need for a top-down approach, a steering committee was established at Beth Israel Deaconess comprised of senior executives from the hospital and the physicians’ organization, including the chief financial officer, the CIO, the senior vice president of network development, and the IT project manager. Physician members included the president, the executive director, and the chief medical officer.

An advisory committee was also established that included prospective community physician users of the EHR. “Since this project is so challenging and requires a precise blend of economics, information technology, and politics, the governance committees were set apart as the place to ask permission, beg forgiveness, and communicate progress on every milestone,” Halamka notes.

The project itself was staffed by a project director, a project manager, a project coordinator, and a design engineer to manage the operations of Beth Israel Deaconess’ partners, including EHR vendor eClinicalWorks, hosting provider Concordant, the Massachusetts eHealth Collaborative, and security solution vendor Third Brigade.

Because Stark allows only 85% of implementation costs—excluding office hardware—to be funded by a hospital, cost modeling was one of the initial top priorities. Beth Israel Deaconess based its projections on informatics data and estimated that the total EHR implementation costs for its 300 nonowned doctors could be $12 million to $18 million for initial setup and training. Aside from the up-front costs, the organization estimated that ongoing maintenance costs could equate to $1.5 million to $3 million per year. “Stark safe harbors provide some guidance here, since Stark separates costs into those which can be shared with hospitals and those which must be paid by the providers themselves,” Halamka says, adding that hardware and most ongoing costs must be paid by the providers.

Other costs included those associated with planning, legal, and infrastructure, which, as startup costs, were not easily computed on a per-provider basis.

Geography brought with it challenges in that there were 300 doctors to consider in 173 physical locations spread over 450 square miles, including many in rural areas with limited infrastructure and access to bandwidth for wireless networking.

Beth Israel Deaconess made the decision to outsource the infrastructure issue and operate a hosted EHR housed in a commercial facility and accessed by physicians via the Internet to avoid having to create network or telecom connections, Halamka says, further emphasizing that no choice in vendor software was offered.

“This is the only way to achieve clinical integration and quality measures needed for pay for performance,” he notes. “Similarly, we mandated one practice management system. Creating numerous interfaces to heterogeneous practice management systems is a recipe for disaster.”

By the close of 2008, the hosting center was fully functional with four practices. The goal is to implement six practices per month.

According to Halamka, one of the most important lessons learned in the process is that free is not cheap enough for primary care physicians. “Many primary care physicians do not have enough spare cash to fund the 15% plus office hardware,” he says, adding that Beth Israel Deaconess is looking at strategies to further reduce costs.

Gaining a Competitive Advantage
For midsized community hospitals and healthcare systems that are unable to employ large numbers of physicians, leveraging the new Stark safe harbor provisions can help organizations gain a competitive edge, according to Eric Perron, information systems director at Ohio-based St. Luke’s Hospital.

“We compete against two large multisystem health networks,” he says, noting that the organization staffs only a handful of its own physicians. “Our strategy has been to align ourselves more closely with physicians. The Stark safe harbor came along at a perfect time for us.”

While the organization’s competitors were focusing their efforts on employed physicians, Perron says St. Luke’s saw an opportunity to connect with independent physicians throughout the greater Toledo area.

Initiated in 2006, the hospital inked a deal with Allscripts in 2007 and undertook the implementation process throughout 2008. “We have a total of 10 physicians [implemented] with 16 in the pipeline,” Perron notes.

The project did not come without its challenges, as choosing the right system was anything but easy. “You are never going to get consensus among physicians. With physicians, you really have to generalize what their needs are,” says Perron, who points out that every specialty will have a different opinion about what’s best. “Getting physician input is crucial, though.”

As the project team at St. Luke’s assessed the market, Perron says there were two large EHR systems that had already made some inroads with physician practices. “We originally thought maybe we could host both of them and be every physician’s best friend,” he recalls, adding that it quickly became apparent that such a setup would not be possible.

The organization then aligned with a consultant who identified the three best systems that could accommodate the needs of what St. Luke’s hoped would become a core of 100 physicians. Perron says the final choices came down to the three largest systems on the market, a plan that was much different than the smaller boutique systems many of the physicians had been considering.

“We were focused on being able to host large numbers, which meant we needed to use the large players,” he says. “Integration is key. Many of those boutique systems can’t do that.”

Like Beth Israel Deaconess, St. Luke’s also faced the challenges associated with the costs of getting hardware upgrades needed for implementing the new system within a particular physician practice—a cost that cannot be incurred by hospitals, according to the Stark provision.

When physicians realized they were staring at a $13,000 bill for hardware alone, Perron says skepticism grew among the ranks. “We shrunk our core pilot down quite a bit,” he notes, adding that once the pilot kicked off, the benefits became obvious to many of the physicians involved. “Our pilot physicians have become the ambassadors of what we are trying to do.”

Appropriate staffing also becomes an important element to the efficiency and effectiveness of the process. “You really need to staff up appropriately beforehand. St. Luke’s didn’t do this and had to play catch-up throughout the process,” Perron says, adding that it’s best to use trained clinicians for implementation consultations and training in the physician practices. “IT nerds can’t do this. … You can train a nurse to be an IT nerd, but you can’t train an IT professional to be a nurse.”

— Selena Chavis is a Florida-based freelance journalist whose writing appears regularly in various trade and consumer publications covering everything from corporate and managerial topics to healthcare and travel.


Exception for EHR Arrangements
To qualify for the physician self-referral exception regarding donations of EHR software or IT and training services, the arrangement must satisfy the following criteria:

• The items and services are provided by a provider entity, as defined in the Stark law, to a physician.

• The software is interoperable at the time it is provided to the physician. For purposes of the exception, “interoperable” means that the software is able to communicate and exchange data accurately, effectively, securely, and consistently with different IT systems, software applications, and networks, in various settings; and exchange data such that the clinical or operational purpose and meaning of the data are preserved and unaltered. Software is deemed to be interoperable if a certifying body recognized by the Health and Human Services secretary has certified the software no more than 12 months prior to the date it is provided to the physician.

• The donor (or any person on the donor’s behalf) does not take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or EHR systems.

• Before receipt of the items and services, the physician pays 15% of the donor’s cost for the items and services. The donor (or any party related to the donor) does not finance the physician’s payment or loan funds to be used by the physician to pay for the items and services.

• Neither the physician nor the physician’s practice makes the receipt of items or services or the amount or nature of the items or services, a condition of doing business with the donor.

• Neither the eligibility of a physician for the items and services nor the amount or nature of the items and services is determined in a manner that directly takes into account the volume or value of referrals or other business generated between the parties.

• The arrangement is in writing; is signed by the parties; specifies the items and services being provided, the cost to the donor of the items and services, and the amount of the physician’s contribution; and covers all of the EHR items and services to be provided by the donor.

• The donor does not have actual knowledge of, and does not act in reckless disregard or deliberate ignorance of, the fact that the physician possesses or has obtained items or services equivalent to those provided by the donor.

• For items or services that are of a type that can be used for any patient without regard to payer status, the donor does not restrict, or take any action to limit, the physician’s right or ability to use the items or services for any patient.

• The items and services do not include staffing of physician offices and are not used primarily to conduct personal business or business unrelated to the physician’s medical practice.

• The EHR software contains e-prescribing capability, either through an e-prescribing component or the ability to interface with the physician’s existing e-prescribing system, that meets the applicable standards under Medicare Part D at the time the items and services are provided.

• The arrangement does not violate the Antikickback statute or any federal or state law or regulation governing billing or claims submission.

• The transfer of the items or services occurs on or before December 31, 2013.

— Source: Centers for Medicare & Medicaid Services