Public
A major source of funding, especially for startup and implementation, is public grants.  The Health Information Technology for Economic and Clinical Health (HITECH) Act provided for billions of dollars in funding for states and community HIEs.  In addition, the Centers for Medicare and Medicaid Services (CMS) have provided additional funding to states to support the adoption of health IT and HIE. In the past, the Agency for Health Research and Quality (AHRQ) and Health Services and Research Agency (HRSA) provided grants to community HIEs. Public grant funds are proving to be pivotal in helping HIEs get up and running.  However, as the funds diminish, community and state-run HIEs will need to determine how to be independently sustainable.  Below are the major public grants currently available to HIEs, their eligibility requirements, and their expiration dates.

• State Health Information Exchange Cooperative Agreement Program¹
  • Funds totaling $547,703,438.
  • Fifty states, the District of Columbia, and five territories received awards.
  • Matching requirements for the states are as follows:
    • FY 2010 – October 1, 2009 – September 30, 2010
      There is no match requirement.
    • FY2011 – October 1, 2010 – September 30, 2011
      One match dollar is required for every 10 federal dollars. Divide the amount budgeted for the above time period by 10 to obtain the required amount of match for FY2011.
    • FY2012 – October 1, 2011 – September 30, 2012
      One match dollar is required for every 7 federal dollars. Divide the amount budgeted for the above time period by 7 to obtain the required amount of match for FY2012.
    • FY2013 – October 1, 2012 – September 30, 2013
      One match dollar is required for every 3 federal dollars. Divide the amount budgeted for the above time period by 3 to obtain the required amount of match for FY2013.
  • Program expires FY2014.
  • All funding has been awarded.

• Beacon Community Program²
  • Funds totaling $233,907,442.
  • Currently seventeen awards with the potential for additional awards.
  • The awards are to support specific and measurable improvement goals in the three vital areas for health systems improvement: quality, cost-efficiency, and population health; and to demonstrate the ability of health IT to transform local health care systems. 
  • Currently five of the Beacon Communities are focusing on implementing, increasing, or improving HIE.
  • The project period is thirty-six months.

• Challenge Program³
  • Funds totaling $16,296,562.
  • Ten potential awards to participants in the State HIE Cooperative Agreement program.
  • Award encourages breakthrough progress for nationwide health information exchange in five challenge areas.  The identified challenge areas were established by Federal and State governments, since implementation of the HITECH Act.
  • The project period coincides with the State HIE Cooperative Agreement project period.
  • All funding has been awarded.

• CMS Medicaid Transformation Grants: Health Information Technology
  • Funds totaling $150 million have been issued Funds can be used for electronic health records, e-prescribing, clinical decision support and health information exchange.
  • Thirty-five states, the District of Columbia, and one territory were awarded grants in 2007.

• Medicaid EHR Incentive Program Funds⁴
  • Provides 90 percent administrative matching funds to State Medicaid Agencies.
  • States applying for the 90 percent matching funds must meet stringent criteria including non-duplication of work under a separate federal grant such as the State HIE Cooperative Agreement.

Private
Community and state-run HIEs often seek private funding for startup and implementation costs.  The 2010 eHealth Initiative Annual Survey on HIE identified some of the most common sources of private funding, which include: hospitals, payers, physician practices, and philanthropic sources.  Employers are also beginning to invest in exchanges.

• Hospitals: With pending meaningful use requirements, easy access to physician networks, and efficiency demands, many hospitals realize investment in health information exchange is critical to their future.  Hospitals are the most common source of start-up funds for exchanges.
• Payers: Many payers have been shown the value of investing in a community or state-run HIE.  By investing in an HIE, rather than building HIEs themselves or relying on multiple hospital systems to build HIEs, they realize a large financial return on investment.  Consequently, many payers have provided grants for capital expenditures to assist HIEs in implementation.
• Physician Practices: Similar to hospitals, and payers, many physician practices are beginning to recognize the value of investing in exchanges to improve quality and efficiencies, as well as meet upcoming requirements for meaningful use.
• Philanthropic Sources: There are numerous non-profit organizations that exist to improve healthcare quality, access, and efficiency.  These organizations can be a valuable funding source for HIEs.
• Employers: Employers also receive a financial benefit from involvement in an HIE.  The benefit is the potential for lowering insurance costs and improving employee health and attendance.  These potential cost savings are beginning to encourage employers to partner with community and state-wide HIEs.