Friday, January 14, 2011


The 2009 Health Information Technology for Economic and Clinical Health Act (HITECH) authorized incentive payments, potentially totaling some $27 billion over ten years, to clinicians and hospitals when they implement electronic health records in such a way as to achieve “meaningful use,” in terms of advances in health care processes and outcomes.

But, are EHRs really “meaningfully useful” or are they more likely to be costly and ineffective?

The latter seems to be one possible interpretation of a recent RAND study of EHR adoption in US hospitals.

The RAND study statistics are impressive: five study authors tallied 17 “quality measures” for three medical conditions against three possible levels of EHR capability (no EHR, basic EHR, advanced EHR) for more than two thousand hospitals for each of 2003 and 2007. They then related changes in quality over the four year timeframe against changes in EHR status (for example, from no EHR to an advanced EHR).

The reported results were disappointing to EHR proponents. Among the hospitals whose EHR capability remained unchanged over the four years, there was no statistically measurable difference in quality improvement between hospitals with EHR capability and those without. For hospitals which upgraded their EHR capability, the performance improvement was generally less than for those who didn’t change, including those with no EHR at all.

So, should we forget about EHRs? Maybe defund HITECH?

Not necessarily.

As the study’s authors point out, there are a several possible explanations for their results other than ineffectiveness of EHRs. Implementation of an EHR—a very demanding effort—might temporarily disrupt other quality improvement efforts. Hospitals with EHRs typically had higher quality measures to begin with, and—like trying to catch up with the speed of light—would likely find improving quality more challenging as 100 percent quality is approached. Results might have been different for other medical conditions. And the timeframe of the study may have been inadequate to measure the impact of new EHRs, some of which may have been implemented only just before the end of the time period.

It can also be argued that the measurement methodology was flawed. Using simplistic indicators of quality like whether or not aspirin was dispensed on arrival or discharge instructions were provided is a little like judging the quality of a meal by whether or not there was a caterpillar in the salad. Presence of a caterpillar definitely indicates a problem, but its absence says nothing about other aspects of the meal. The study authors indicate their awareness of this limitation in stating “we are concerned that the standard methods for measuring hospital quality will not be appropriate for measuring the clinical effects of EHR adoption.”

Perhaps most importantly, as with other IT systems, EHR success depends on the competence of the implementers and the willingness of the users to accept change, with poorly managed projects more likely to foul up existing processes than improve them. The RAND authors praise programs initiated by the Office of the National Coordinator for Health Information Technology to improve EHR implementation, and comment—in spite of the inconclusive results of their study—that “We believe that these programs are well conceived and anticipate that they will lead to more effective use of EHRs, which will in turn lead to improved quality in US hospitals.”

EHR systems are no panacea, and clearly there have been both successful and troubled EHR implementations. What is needed now is a closer look at what works and what doesn’t, how well EHRs perform over a longer timeframe than the RAND study, and a much less simplistic look at what is really happening to clinical quality as a result.

Friday, January 7, 2011


The trials and tribulations of Utah’s much-touted Health Exchange continued in December, with the announcement that yet another chief executive had quit, along with the admission that very few eligible employer groups had signed up for the exchange.

The Utah exchange differs from that of Massachusetts in that it currently focuses on coverage for small employers offering defined contribution plans, a policy that was hoped to demonstrate the effectiveness of such plans. However, so far enrollment has been far too low to test the merits of this approach.

The Salt Lake Tribune reported in late December that a new executive director had been appointed to head the exchange, which is administratively located in the Governor’s Office, making the third director in just over six months.

The Tribune went on to compare the expectations of State officials, who had anticipated enrolling 3,000 small employers with an estimated total of 40,000 employees, with the current reality. As of late December, with coverage scheduled to start on January 1, 2011, just 43 of the State’s estimated 50,000 small businesses had signed up and been determined eligible.

Back in September, when the Utah exchange started to accept coverage applications, Utah’s Governor Gary Herbert was quoted as saying: “[the exchange] is quickly becoming a model for the rest of the nation when it comes to health care reform."

Hopefully not.

Thursday, January 6, 2011


The New York Times headline was “Health Spending Rose in ’09, but at Low Rate,” but it could just as appropriately have been “Health Spending in ’09 Took Biggest Jump Ever in GDP Share.”

The computers in the CMS Office of the Actuary have finally quit grinding away and disgorged their findings for US health care spending for 2009. Total spending did rise at the lowest rate in fifty years—just 4 percent over 2008—but health care’s share of the economy jumped from 16.6 percent to 17.6 percent—the highest rate of increase in fifty years—as the economy shrank. In other terms, 2009 saw US health care cross another half-trillion dollar threshold—to $2.5 trillion for total expenditures—and pass yet another thousand dollar per capita marker—to just over $8,000 a head.

As the economy started to emerge from the recession, federal spending on health care accelerated, but many individuals deferred or declined medical care. Medicare expenditures rose to $502 billion, an increase of almost 8 percent, while Medicaid expenditures jumped to $374 billion, an increase of 9 percent, fueled by a 22 percent increase in federal support that was only partially offset by a drop of 10 percent in state funding. In comparison, in the private insurance sector, total premium dollars paid increased by just 1.3 percent to $801 billion, with an average premium increase of 4.6 percent.

In terms of population, Medicare enrollment rose by about 2 percent to 46.5 million, Medicaid enrollment rose by 8.3 percent to 48.6 million, and private insurance enrollment fell by more than 6 million—3.2 percent—to around 197 million.

What does this imply for the next two to three years, until the scheduled 2014 date for full implementation of health care reform? Will we revert to pre-recession increases in expenditures?

It seems highly possible.

Assuming the current economic pattern of a very slow recovery from the recession, enrollment increases in Medicaid and decreases in private insurance should indeed return to earlier trends—close to stable for Medicaid and a slow erosion for private insurance—while Medicare enrollment will continue to grow with the number of older Americans.

In terms of expenditures, a slowly improving economy may result in more use of medical services as some families have more household income while others who deferred care in 2008-2010 now find it necessary. Providers and insurers may be tempted to build “war chests” in anticipation of the impacts of reform, with Medicare spending in particular jumping ahead of the uncertain potential impacts of the Independent Payment Advisory Board and accountable care organizations, as well as reductions in Medicare Advantage spending. Even ahead of 2014’s big expansion, Medicaid will continue to grow, with some possible face-offs over funding between the federal government and those states in the most serious financial straits. The one area of slight statistical improvement is likely to be in health care’s share of GDP, with the annual increases back below half a percentage point—but still pushing health care rapidly towards a fifth of the economy, and with an even bigger increase expected with reform implementation in 2014.

Monday, January 3, 2011


A very happy New Year to all readers of Health Care REFORM UPDATE!

And, also, some happy New Year gifts from the Obama administration, by way of the Affordable Care Act… January 1, 2011 is the date that a number of the ACA changes designed to make health care coverage more attractive become effective, along with a few that will be less popular—notably to insurance companies.

Most Medicare beneficiaries will indeed be beneficiaries of the ACA changes. The Part D doughnut hole will effectively shrink, with 50 percent discounts on brand-name drugs for those whose expenditures put them “in the hole.” All Medicare plans, including traditional fee-for-service Medicare, will also cover all preventive care with no out-of-pocket charges (although many Medicare Advantage plans already provided this benefit). Meanwhile, physicians may bail out of the program less rapidly as a new ten percent bonus is added to payments to primary care docs and general physicians. On the other side of the ledger, however, wealthier beneficiaries will see lower subsidies and the beginning of higher Part B premiums.

Also on the negative side, it will no longer be possible for individuals with HRAs or HSAs to treat reimbursement for over-the-counter medications in the same way as prescription drugs. Only if prescribed by a physician will OTC items be eligible for HRA or HSA tax-free reimbursement.

Finally, insurers will take some more hits. New “fees” will be levied on drug companies based on their sales of brand-name pharmaceuticals. The much-debated medical loss ratio restrictions [see earlier REFORM UPDATE posts] will also take effect, while the “confess and explain” rule for premium increases over ten percent will be effective upon final rulemaking. And, going back to Medicare, insurers with Medicare Advantage plans will have their 2011 payments frozen at 2010 levels, with a start also being made on reducing the excess of Advantage payments over FFS costs.