By VINCE KURAITIS JD, MBA and DAVID C. KIBBE MD, MBA
….or to be more specific, HITECH is synergistic with payment reform that could come from the recently passed national health care reform legislation — the Patient Protection and Affordable Care Act (PPACA).

We’ll keep this post fairly short and try to avoid many of the more divisive aspects of this topic. The need for healthcare payment reform is well understood on both sides of the aisle:

Realizing the full potential of health IT depends in no small measure on changing the health care system’s overall payment incentives so that providers benefit from improving the quality and efficiency of the services they provide. Only then will they be motivated to take full advantage of the power of electronic health records. Dr. David Blumenthal,  New England Journal of Medicine, April 9, 2009

What’s the Connection Between Health IT and Payment Reform?

A lot has already been written about the problems with payment approaches in health care. The current system rewards piecemeal work, thus economically incentivizing care providers to deliver more visits, tests, admissions, etc.

Todd Park and Peter Basch describe the dynamics between payment and health IT in their 2009 report: A Historic Opportunity: Wedding Health Information Technology to Care Delivery Innovation and Provider Payment Reform. They describe an interconnected “vicious cycle” among:  lack of provider payment reform, lack of care delivery innovation, and lack of health IT adoption. They also describe a “virtuous cycle” among: provider payment reform, care delivery innovation, and health IT adoption.

(click on a graphic to see a larger version)

Basch and Park suggest some of the innovations that could be powered by health IT:

• Preventive care
• Chronic disease management
• Care coordination
• Non-visit-based care, or “e-care”
• Knowledge-based medication management

The PPACA also legislates many innovative initiatives that are highly dependent on health IT for success.  Examples include quality reporting, administrative simplification, a medical device registry, etc. A recent HIMSS analysis provides a detailed (176 pages!) list and description of  Health IT Provisions in the PPACA [membership required].

What Payment Reforms are Contemplated by the PPACA?

The PPACA does not directly change payment systems for health care providers.

The PPACA authorizes extensive demonstration and pilot projects to test various models of care delivery and payment reform, e.g., Accountable Care Organizations, Patient Centered Medical Homes, bundled payments, etc. The PPACA also creates the Center for Medicare and Medicaid Innovation and provides it with independent authority to conduct additional pilots.

Few details are available…and this will take several years to play out…

…yet we are very hopeful that HITECH and forthcoming payment reforms will be able to create the Virtuous Cycle. Stay tuned.

Vince Kuraitis JD, MBA is a health care consultant and primary author of the e-CareManagement blog where this post first appeared. David C. Kibbe MD MBA is a Family Physician and Senior Advisor to the American Academy of Family Physicians who consults on healthcare professional and consumer technologies.