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January 7, 2008

Stopping Traffic?
By Kim M. Norton
For The Record
Vol. 20 No. 1 P. 20

Poor interoperability and a lack of funding are among the roadblocks facing physician practices if they want to take advantage of the Stark exemption’s incentive for implementing EMRs.

Everyone loves a deal. Who doesn’t get goose bumps when they see signs announcing 50% to 85% off the original price?

Health and Human Services (HHS) must have realized the intrinsic value in seeing such a price reduction attached to the much-sought-after and gingerly approached electronic medical record (EMR) that is seeping into healthcare. Under the HHS’ Stark rule and, most recently, the Stark exemption, hospitals are allowed to subsidize up to 85% of the cost of EMR software to affiliated physicians in an effort to standardize data transfer and communication between ambulatory and acute care.

However, with the exemption now more than one year old, it does not appear that there is much interest among hospitals—or physicians—to utilize the law. This is for various reasons, including interoperability concerns, limited choices for physicians, physician resistance to tie themselves to a particular hospital, an inability to fund the subsidy, and inherent skepticism within the industry.

With so many factors impeding the progress of EMR technology to the physician’s office, the Stark rule appears to be for naught. However, according to Charles R. Anastos, Jr, senior vice president of Beacon Partners, Inc., a consulting firm in Weymouth, Mass., “EMR technology will absolutely be widely adopted. Virtually all practice management software has some sort of EMR built into it. Once issues such as choice, cost, and data integration are resolved, you will see more widespread adoption.”

According to a recent survey of 117 members of the College of Healthcare Information Management Executives, another concern among hospitals’ chief information officers is over the legal implications should the antikickback safe harbor or Stark laws be changed. Despite the survey, healthcare attorney Tizgel K. S. High, an associate with the law firm of Powell Goldstein LLP in Atlanta, says, “There is always the ability [for the Centers for Medicare & Medicaid Services] to change or clarify the exemption, but if the hospital is diligent in its [EMR] arrangements that implicate the Stark law and closely follows the mandates of Stark, there should not be reason to worry.”

High does acknowledge inherent risks, such as the hospital not paying for referrals, as well as fraud and abuse. Also, he says the healthcare organization should be certain “that the determination to provide an EMR is made in a reasonable and verifiable manner that does not take into account the volume or value of referrals from the physician practices so there is no perception of strategic partnerships.”

It All Boils Down to Money
Of the concerns addressed by industry experts, the most glaring involves the lack of finances. “Hospitals are at the margin [financially] and are struggling themselves, and to roll out something of this magnitude requires a large capital investment that most simply do not have,” says Patrick Hope, legislative counsel for the American College of Physicians. Both Hope and High have seen little, if any, movement by hospitals to take advantage of the Stark law exempted subsidy. “I have not heard of any hospitals reaching out to physicians [on any large scale], and their general counsel are advising against it because of the lack of financial resources to support it,” says Hope.

But there has been plenty of press generated by hospitals starting pilot programs to roll out their EMRs, and software companies are eager for the industry to adopt the technology. In most cases, both hospitals and software companies completely contradict what the attorneys and industry experts are saying. Although neither party is wrong, there is a large monetary investment needed both on the part of the hospital with the 85% and the physician with the 15% plus a monthly subscription fee. “Hospitals are struggling to roll out EMRs for themselves, and the prospect of offering a subsidy to physicians is just unrealistic,” says Hope.

Whether the hospital is nonprofit or for-profit, the subsidy does not change—although the nonprofit hospital is tax exempt, it will depend on its business structure and financial soundness to determine if it is capable of funding a subsidy. “Financial viability is the most critical factor right now, and any subsidy—whether 50% or 85%—is a pretty costly expenditure for hospitals to undertake, and many simply will not be able to provide it,” says High.

Even for some physician practices, 15% is an unrealistic cost. “Large practices could potentially afford the 15% up-front cost of the subsidy, but it is far more unrealistic to expect a small practice to afford that up-front cost,” High says. As for the subsidy payment, since the Stark exemption prohibits hospitals from financing the physician’s share, that 15% is to be paid up front and cannot be paid in installments, according to High.

With the Stark exemption coming to a close in 2013, many are hoping there is a better plan for adopting EMR technology that is financially viable and interoperable. To address these issues, the National Health Information Incentive Act of 2007 (HR 1952) was introduced last April by Rep Charles Gonzalez and Congressmen Phil Gingrey, MD, to create “a pay-for-use or sliding scale incentive program for acquiring or upgrading a practice’s EMR use,” says Hope.

Under HR 1952, physicians would be given Medicare payment incentives for upgrading their IT systems through grants and loans provided under an amendment of title XI of the Social Security Act. The pay-for-use aspect of upgrading their EMR software would provide “much-needed ongoing assistance to the physician rather than the initial assistance that many cannot afford anyways,” says Hope.

With physicians facing a 10% cut in their Medicare reimbursements in 2008 and payers realizing a $200 billion annual savings through the use of EMRs, there is a huge monetary disparity between the two parties. “Although the use of EMRs will improve patient outcomes for physicians, they also bear the brunt of the cost associated with EMR implementation,” Hope says. “Another solution could be to shift the cost of EMR implementation to the payers, which would amount to a tiny fraction and would more than pay for itself.”

Interoperability and Limited Choice
Most industry experts agree that Health Level Seven (HL7) has and will facilitate interoperability between EMR software programs. However, some in the industry believe interoperability is not there yet and does not appear to be anywhere close. To further confuse the matter, there are Certification Commission for Healthcare Information Technology (CCHIT)-certified products that have earned the distinction by meeting a series of standards. “CCHIT certification adds credibility to the market. There are about 40 certified products on the market now that vary in cost and function. Each is compatible only at the data level [HL7], and they are not based on a standardized medical record model,” explains Bill Bysinger, BBA, MBA, chief executive director of eMRNet, LLC, a Georgia-based EMR company.

The healthcare industry is a non–standards-based industry, as evidenced by the different languages spoken between the emergency department and the physician’s office. “Healthcare is more complex in the way it documents patient data because it has been made to be that way. Although EMRs can transfer data through HL7, not every EMR will be compatible with the other, and a bridge would need to be built in order for one program to speak with another, which only further complicates the issue,” says Bysinger.

Part of the problem begins with the limited choices hospitals are offering physicians under the Stark exemption. What one vendor offers as standard in their EMR package may be different from another vendor, a circumstance which is not unusual because “vendors have traditionally avoided standardization because it destroys competition,” says Bysinger.

Another gripe among physician practices is the lack of choice being offered when they sign on with a hospital’s EMR network. “Offering multiple choices when it comes to selecting an EMR package is necessary,” says Peter Waegemann, CEO of the Medical Records Institute. “The system the hospital chooses is not necessarily the one the doctors want or need.”

Hospitals have long been trying to ingratiate themselves with area physicians through marketing. “[Hospitals] are failing with the marketing aspect and instead are turning to financial incentives, as deemed through the Stark exemption. But to truly be successful in creating this relationship, hospitals must offer lower-cost alternatives to physicians and must consider both the usability and scalability of the software,” says Waegemann.

“CCHIT is important but is not necessarily what small practices are looking for,” he continues. “Uncertified software may be more cost-effective for a small practice and if the system is upgraded, it can be compatible with the hospital’s EMR software if they use CCR [continuity of care record].”

However, some hospitals are rejecting these practices because of incompatibility issues. To solve this dilemma, Bysinger suggests a model offering three tiers of software compatibility to the physician based on practice size: solo, small, and large. He mentions that some hospitals are already offering this type of scalability and believes more widespread use would lead to greater EMR adoption rates across the board.

Anastos says physicians should be offered a choice of two vendors that fit the needs of their practices. “I do not see scalability as an issue in EMR adoption because any EMR can be scaled back for the smaller practice and most can be enhanced for the larger practice. Even Web-based access to the hospital’s EMR system with limited functionality would be of value to hospitals who want to affiliate themselves with a particular physician,” he says.

Skepticism and Data Mining
Besides interoperability issues, some physicians have expressed their concern of sharing data with a hospital. The inherent nature of wanting to keep your financials secret is something most physician practices want to protect. “There have been conspiracy theories out there about the ability of the hospital to infiltrate the practice’s practice management software and access its financials or referral records, but the truth is, there are enough solutions out there to separate financial databases to enhance security,” says Anastos. But, he adds, “Nothing is ever free, and you get what you pay for. Hospitals want something from physicians, and physicians want to upgrade their current patient record capabilities, so the relationship would have to be built on trust.”

Another way for physicians to upgrade their record-keeping system would be to purchase their own EMR system and work with whatever hospital they so choose. “Some vendors may be willing to knock off 60% to 70% of their price in order to help physicians purchase [a system]. Today, it is all about market share” explains Anastos. Of course, such vendor discounts raise questions about the company’s financial situation. Allscripts president Lee Shapiro asks how can they afford it, and how long will they be around?

“I do not want to downplay the concerns of data mining,” says Shapiro, “but the nature of the relationship between the hospital and the physician is one that must be built on open communication.” As part of the give-and-take relationship between the hospital and physician, there is occasionally an expectation by the hospital to be able to view the practices’ population management and clinical information in exchange for the maximum amount of the subsidy.

Under the Stark rule guidelines, the hospital is allowed to subsidize only the EMR software. They are not allowed to subsidize the practice management software where most practices house their financial and referral records, explains Shapiro. “When a hospital chooses us as a vendor, we absolutely offer the physician a choice based on the size of their practice and, although we would love for them to use our practice management software, this is a decision the practice must make independent of the agreement with the hospital if they have not done so already,” he says.

Widespread Adoption
In spite of the apparent flaws in the Stark rule and the obstacles that must be overcome before EMRs are widely adopted, many believe it’s only a matter of time before the technology becomes commonplace. With the focus on getting the software into every physician’s hands, there is the hope that one day healthcare will rival the banking industry where data is shared seamlessly.

— Kim M. Norton is a New Jersey-based freelance writer specializing in healthcare-related topics for various trade and consumer publications. She can be contacted at kim_norton1@hotmail.com.

Taking Advantage of Stark
In May 2007, the Saint Francis Physician Hospital Organization (PHO) in Hartford, Conn., began the pilot phase of its electronic medical record (EMR) program that it started prior to the adoption of the new Stark regulations. “When the Stark exceptions were expanded, we realized it was a great opportunity to assist our physicians, most of whom are in small practices, to undertake this critical investment,” says Jess Kupec, president and CEO of the Saint Francis PHO. “In working with our hospital, we developed a collaborative effort between the PHO, the hospital, and our 650 affiliated physicians to introduce the software with the maximum allowable subsidy under the Stark exemption.”

The 617-bed acute care hospital is offering its affiliate physicians Allscripts TouchWorks software, which is then tailored to their particular practice. In the single-system platform design, the hospital will have access only to the practice’s clinical data, basic practice management, and demographics. “We have not had resistance in terms of the model we are using because we are creating an integrated network based on all physicians sharing the EMR and practice management software interfaced with the hospital’s CPOE [computerized physician order entry],” says Kupec.

To date, Saint Francis has subsidized eight physicians and hopes to have helped 15 by the end of the year. The contract between the hospital and physicians is for seven years and costs each physician hundreds of dollars per month as opposed to thousands in a nonsubsidized model. “The difference between our model and others seen across the country is that we have a well-thought-out plan, and with strong physician support, we have high expectations for our program,” says Kupec.



HR 1952: National Health Information Incentive Act of 2007, available here.