Unpacking ARRA

“The world changed yesterday at 1 pm Mountain time,” Steve Lieber, President of the Health Information Management Systems Society (HIMSS), told over 1,500 attendees of a webinar on February 18. These new times, Lieber said, “will require our vendor community to react a little bit differently and change business practices.” Lieber said that
health information technology vendors will need to be, in his words,
“more forthcoming” as well as “make absolute iron clad binding

The bottom line: time is of the essence, based the HIT details written within the 1,100 pages of The American Recovery and Reinvestment Act of 2009 (ARRA)…aka, “the stimulus bill.”

Lieber called ARRA, “the most important legislation to ever impact health IT.”

The amount of funding
related to HIT is about $20 billion. Never before in the American
health system has there ever been such an investment, especially at one
time, Lieber told those of us listening on the line. Some
money will flow in the current calendar year, some dollars will flow in
subsequent years, and some funding will be available until they are
completely spent.

Nine areas will receive HIT funding:

1. The Office of the National Coordinator of HIT (ONCHIT) will receive $2
billion to fund initiatives that grow out of a plan that will be issued
later this year.

2. HIT adoption incentives through Medicare and Medicaid reimbursement will begin funding to physicians
and hospitals beginning in 2011. A and MC reimbursement system for
2011. Although this money does not begin for another 18-21 months, any
entity that wants to participate in this incentive program must be
using systems at that time. Considering how long it takes to get
systems implemented, Lieber suggests, means any entity not yet using
HIT may well be behind schedule. Both the provider and vendor
communities need to understand this.

3. $1.1
bn will be allocated to comparative effectiveness with the Agency for
Healthcare Research and Quality (AHRQ). Issues to be considered will
range from evaluation of clinical and practice effectiveness as well as

4. The Indian Health Service will receive funding.

5. Construction funds will go to the Health Resources and Services Administration (HRSA), focusing on community health centers.

6. $500 mm will be allocated to the Social Security Administration to upgrade HIT systems.

7. The Veterans Administration has some funding identified in ARRA.

8. The Dept. of Agriculture will receive HIT money — in the form of
telemedicine funding. Think about distance learning, and broadband for
health applications.

9. $4.7 bn will go to the National Telecommunications Administration for broadband. This isn’t specific to health care but broadband is key to enable telemedicine diffusion.

Jane’s Hot Points:
Time is indeed of the essence if physicians and hospitals want to
receive the full incentive payment for HIT adoption beginning in 2011.
The monies are significant: for physicians, the full payment between
2011 and 2015 will range between $44K and $60K. For each year a
physician is not in the program, the incentive payments decline by 1%
each year. The ultimate calculation of payments to physicians is based
on Medicare patient volume.

For hospitals,the incentive payment begins at $2 million in 2011, with additional
payments based on Medicare volumes. As with physicians, the incentive
stops in 2015. In 2015, there will be penalties for providers not
participating in the program.

Thus, ARRA is not only an economic stimulus bill. It’s an HIT stimulus bill for adoption by providers.

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7 replies »

  1. The idea that IT would sit on top of the healthcare systems is part of the problem.
    The whole field needs redesign, from me and my box of receipts to my clinic and their expensive data entry system to the village pharmacy with their tortured relationship to Kaiser’s system.
    Health record standards enable agile development by nailing down the vocabulary, but they don’t handle interaction and flow of information.
    A wide variety of conforming applications will become available and some will be lemons. Bolt-ons tend to be lemons because they don’t survive the adoption ritual.
    Health reform efforts will be more successful if IT is built-in, not bolted on.
    Standards evolve and so will the health record. Ask the vendor how much it will cost when the standards change. The right answer is that change is built into the system. Most of what’s out there now is bolted in and bolted on.
    Health 2.0 needs to be a collaborative continuous improvement process that works at the touch points, guided by standards, built by the same people who made myspace so popular a few years ago, our teenage kids.
    The opportunity is to change the way we interact with healthcare to resemble the way they interact with music.

  2. maggiemahar,
    You mean like the “simpler, less expensive solutions” that the government funded CCHIT certification has on their list? Quite the opposite.

  3. What botetourt said.
    And see what Kibbe said in his last piece on THCB.
    The good news: the Obama admnistration is not going to leave this to the market to decide. The administration will be sifting through what’s out there, and
    recommending simpler, less expensive solutions.

  4. This is emblematic of a government that still doesn’t understand that we need to address our healthcare system’s underlying structural inadequacies before we overlay a multiplicity of disparate IT “solutions” on top of it. In addition, there are too many vendors with expensive and ponderous products out there that will never be truly useful. My organization has contracted with two of the top names in healthcare IT (for many years), and after suffering through years of delayed and inadequate product development, the products–for both hospital and physician practice management–are terrible. And our physicians and nurses are actually motivated to use an automated solution because of fortunate choices made years ago. But the products just don’t do the job-especially considering the capital and time involved to get these things installed and upgraded. A free market approach here is not going to solve a thing, other than maybe increase sales for many of the crappy vendors we have all been dealing with.

  5. The need for healthcare IT is there. Though 20 billions is a real waste of money. And I still do not see how it is going to transform healthcare.
    The healthcare crisis is not because of IT or lack of it. IT can only enable or screw up things. What is lacking is policy, competiveness, quality improvments. Over the last decade, hospitals have not been able to reduce the preventable injuries. With that competence, I would like to know how IT is going to help reduce that. Will it have some impact – of course.
    Our problems are so big….little impact would have no meaning.
    On the topic of implementation cost…I know people have spend millions of dollars. And by that process, I agree with Eric. This cost is again driven by lack of standardization, process, etc. And of course a better competency would help too.
    We need softwares that are controlled by patients and can talk to hospital system. Why do we need a centralized system anyway if I can bring my information. The information no one cares about till patient goes to the hospital anyway.
    Too much waste..We need toput our thinking hat. Otherwise, the consequences will be same as what manufacturing world has seen with ERPs…too expensive to implement and maintain.

  6. Eric, I just wish there were a lot more HIT sponsors here! On the other hand HIMSS and EHVRA have been listening hard as they’ve lobbied like hell against VISTA & open source software.

  7. One more HOT POINT: the actual cost of implementation and maintenance of a system for nearly every provider group will dwarf the ‘incentive’– and, I will wager, will be more than even the penalty… encouraging some provider groups to just choose to pay the fine instead of adopting… (a la Mass employer penalty).
    And another– the ONCHIT is authorized to develop and sell a government HIT product to compete with the private sector and to subsidize it according to whatever standards they deem ‘necessary’.
    HIT sponsors of THCB- are you listening?