Report Shows Promising Signs for Financing Of Beneficial Health Information Technologies To Improve Quality and Safety
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Phil Duncan Tom O'Reilly |
April 21, 2004 |
Washington, D.C., April 21 — A report released jointly by the Foundation for eHealth Initiative and The Health Strategies Consultancy points to promising signs that financial incentives are emerging which will help U.S. healthcare providers adopt innovations in information technology that will help patients receive safer, better care.
The report, “Financial Incentives: Innovative Payment for Health Information Technology,” identifies types of financial incentives that already are working to promote the adoption of health information technology (HIT).
“The programs we studied hold considerable promise for improving quality and reducing health care costs. We are now seeing payment and incentive pilots in communities across the country that will help promote broad scale adoption of these beneficial technologies and serve as a model for the federal government and for new legislation,” said Dan Mendelson, President of Health Strategies.
“There is growing interest in HIT adoption, and discussions regarding the role of financial incentives are accelerating considerably right now, with interest from many, many stakeholders in both the public and private sectors,” said Janet M. Marchibroda, Chief Executive Officer of the eHealth Initiative and Executive Director of its Foundation. “This is fueled by the recent dramatic increase in the number of communities and healthcare stakeholders who are now working together to launch both IT and health information exchange programs across the nation, recognizing that these programs can only work in an environment where financial incentives are aligned.”
The Foundation for eHealth Initiative’s Connecting Communities for Better Health Program yielded in December 2003 funding applications from 134 communities in 42 states and the District of Columbia who wanted to implement IT and health information programs and needed funding to get this work off the ground. In addition, the U.S. Agency for Healthcare Research and Quality’s $31 million “Transforming Healthcare Quality through Information Technology” planning and implementation grant program will likely result in hundreds of applicants, who will respond to a request for proposal by the deadline, which is close of business April 22.
The report identifies four types of financial incentive models currently in place and presents details on specific programs associated with each type. The four types are:
- Payment Differentials – Bonuses or add-on payments that reward clinicians and other providers for HIT adoption. Essentially a “pay for performance” system, and one of the most popular financial incentive programs.
- Cost Differentials – This increasingly popular approach uses co-payment and deductible incentives to target consumer behavior by steering them towards clinicians and other providers that have adopted HIT.
- Direct Reimbursement – This model reimburses for a new category of service – the “online consultation.”
- Shared Withholds – This model withholds a certain amount of provider reimbursement until HIT adoption. This is the least utilized incentive.
Apart from these four major models, the report identifies other incentives outside the healthcare payment system that may have the potential to promote HIT adoption: medical malpractice insurance discounts, collaborative relationships between IT vendors and providers, tax credits, and changes to Stark and anti-kickback laws.
The report, produced by The Health Strategies Consultancy, is available at www.healthstrategies.net and www.ccbh.ehealthinitiative.org. The report highlights criteria for designing financial incentive models that may work best for particular provider and community settings while also detailing the misalignment of incentives that has slowed HIT implementation. The report identifies and characterizes the spectrum of options and design decisions that should be considered by providers and communities examining incentive programs for HIT.
Sheera Rosenfeld, a Senior Analyst at Health Strategies and a study author, said the report’s findings “are particularly timely in light of the Administration’s increasing interest in this issue, including new demonstration programs to be conducted by the Centers for Medicare and Medicaid Services such as the chronic care demonstration program announced on April 20, as well as the recent draft recommendations on HIT adoption made by the President’s Information Technology Advisory Council (PITAC). These private-sector initiatives should serve as a model as the Administration and Congress develop their initiatives over the coming year.
While cautioning against a “one-size-fits-all” approach
towards incentive program adoption, the report identifies the features of different programs that show great promise in healthcare and concludes that the federal government should play a more active role in developing and promoting innovative incentive programs and payment policies that reward HIT adoption and quality improvements.
About the eHealth Initiative and its Foundation
The eHealth Initiative and the Foundation for eHealth Initiative are independent, non-profit affiliated organizations whose missions are the same: to drive improvement in the quality, safety and efficiency of healthcare through information and information technology.
Both organizations are focused on engaging multiple and diverse stakeholders — including hospitals and other healthcare organizations, clinician groups, employers and purchasers, health plans, healthcare information technology organizations, manufacturers, public health agencies, academic and research institutions, and public sector stakeholders — to define and then implement specific actions that will address the quality, safety and efficiency challenges of our healthcare system through the use of interoperable information technology.
For more information on the eHealth Initiative and the Foundation for eHealth Initiative, go to www.ehealthinitiative.org.
About The Health Strategies Consultancy
Health Strategies is a Washington-based health policy think tank and strategic consulting firm that focuses on the commercialization of new medical technology. Its diverse client base includes Fortune 500 healthcare technology companies, Federal Government agencies and major medical foundations. The Health Strategies team includes health care specialists with unparalleled expertise in pharmaceutical and medical device policy, with collective experience spanning the White House, the U.S. Office of Management and Budget (OMB), the U.S. Department of Health and Human Services (HHS), and the U.S. Congress.
Additional information about Health Strategies is available at www.healthstrategies.net.
