Electronic Health Record Buyers

In a recent open letter to President Obama, David Kibbe, a senior adviser to the American Academy of Family Physicians and expert on health information technology (HIT), described the current electronic health records (EHRs) as costly, difficult to use, and unable to allow hospitals, physician offices, or pharmacies to easily share information about patients’ medical histories and treatments. He wrote, “If America’s physician practices suddenly rushed to install the systems of their choice, it would only dramatically intensify the (tower of) Babel that already exists.”

The following points should help physician buyers understand why physicians should approach EHRs and e-precribing tools with extreme caution:

• Affordability. Most standalone EHRs cost a minimum of $10,000 per physician for purchase, installation, and staff training. Maintenance and upgrades can easily run up to $2,000 per year per physician. Subscriptions for EHRs typically cost $400 per month per physician.
• Return on Investment: Although the government and health plans reap 90 percent of the financial benefit of EHRs, physicians are expected to pay for the efforts in time and money. For example, the current incentive dollars for e-prescribing and pay-for-performance may not amount to more than $3,500 per physician per year — hardly enough to offset the costs, let alone the headaches. Many of the incentives are not guaranteed for more than four years.
• Reduction in Productivity: The average primary care physician will experience a 20 percent reduction in productivity and collections in the first year of using a full-blown EHR. Beyond the first year, productivity rarely surpasses what it was with paper records for PCPs.
• Interoperability: Physicians who buy an independent e-prescribing tool or EHR that is not fully integrated with their practice management system for demographic data, billing, and collections will be frustrated with the ongoing costs and headaches of making the two systems work seamlessly. Anytime there are upgrades to one system, there are unanticipated costs and glitches with the second system. There are also major interoperability issues between physicians and their hospitals, labs, and radiology vendors. This connectivity is necessary to eliminate the errors and the time associated with having to re-key patient data into your EHR.
• Unexpected Downtime: Solo and small practices cannot afford dedicated technicians to solve problems inherent with electrical outages, computer glitches, and server crashes.
• Changing Requirements: EHRs will need to incorporate ever-changing requirements for clinical decision support, order entry, data capture and information exchange between stakeholders. Physicians will be regularly forced to spend additional dollars to modify their information systems.

Based upon the current incentive timetables, it is my recommendation that physicians should NOT start shopping for hardware or software until the fall of 2010, with the goal of launching in January 2011. Although some physicians may want to proceed sooner, my rationale for waiting is as follows:

• Cost of both hardware and software will continue to drop over the next two years.
• Functionality of fully integrated practice management and EHR systems is dramatically improving from month to month. EHRs of the next decade will need to include modules for population health improvement, clinical decision support, eligibility verification, charge capture, claims adjudication, HEDIS reporting, and interoperability. Although there are some excellent products on the market today, none of the products is ready to meet the requirements that are expected to be in place within two years.
• MicroSoft Windows 7 is likely to replace Windows Vista in early 2010.
• Open source platforms are likely to heat up the competition among vendors and drive the price of EHRs downward. New adaptations of Vista for the ambulatory physician will stimulate disruptive innovation.
• Inexpensive and energy-efficient thin client hardware will become an attractive option for physician offices.
• Incentives for innovative programs run by state, federal, regional, health plan, and independent practice associations will continue to evolve.
• Standardized patient ID cards and card-readers that interface with practice management systems is a priority for the Medical Group Management Association (MGMA). MGMA estimates that machine-readable patient ID cards could save physician offices, health plans, and hospitals as much as $1 billion a year by eliminating unnecessary administrative efforts and denied claims
• Real-time claims adjudication through the EHR will allow physician offices to determine eligibility, deductible thresholds, and CPT codes for immediate adjudication and reimbursement of the office visit. This feature is where the real long-term financial reward is for physicians.
• Standards: Under the stimulus act, the Office of the National Coordinator (ONC) for Health Information Technology will require EHRs to adopt new sets of standards, specifications, and certification criteria by Dec. 31, 2009. These new standards will result in unanticipated upgrade costs for those who have already purchased an EHR.
• ICD-10 code sets are likely to be required by October 2013 and require tighter integration between clinical and billing functions.
• FDA Barriers: The FDA still prohibits the use of e-prescribing modules to submit prescriptions for controlled substances. This explains why fewer than 5 percent of all prescriptions in the United States have been filed electronically over the last year.

What about the HITECH Act in the American Economic Recovery and Reinvestment Act? It is estimated that $17.2 billion of the $20 billion dollars set aside to stimulate IT adoption will be in the form of incentive programs under Medicare and Medicaid. As currently written, ambulatory physicians participating in Medicare will be eligible if they can demonstrate that they are “meaningful users” of certified EHR technology (standards are to be established before Dec. 31, 2009). “Meaningful use” is defined as being connected in a way that improves the quality using measures selected by the ONC. Incentives will be limited to 75 percent of Medicare-allowed charges in any year and up to $44,000 over five years. Physicians practicing in health professional shortage areas can receive and additional 10 percent. Physicians who start after 2014 will not receive any incentives.

For Medicare-covered services rendered during 2015 or after by a professional who cannot demonstrate meaningful EHR use, the Medicare physician fee schedule will be reduced by 1 percent for 2015, 2 percent for 2016, and 3 percent for 2017. There is an escape clause for professionals who can demonstrate significant hardship, but that clause will apply to a professional for a maximum of five years.

Unfortunately, the money from the Medicare and Medicaid programs will be paid out over four or five years and won’t be available until 2010 or 2011. The Act provides for comparable incentives and disincentives for professionals providing substantial services through Medicare Advantage plans.

The Act also provides for payments to those states that have approved Medicaid plans and programs to encourage the adoption and use of certified EHR technology. Specifically, these states will receive 100 percent of the payment outlays of their programs and 90 percent of their costs of administering such programs. Payments to physicians cannot exceed 85 percent of average allowable costs for certified EHR technology and are capped at $25,000 for the first year and $10,000 for subsequent years. These amounts will be reduced by two-thirds of that amount for pediatricians. Eligible providers must have at least a 30 percent Medicaid patient load, and pediatricians must have at least a 20 percent Medicaid patient load. Federally qualified health center or rural health clinics must see at least a 30 percent load of patients classified as “needy,” which is broader than Medicaid beneficiaries.

For those of you who are ready to make the leap despite the challenges, I would offer the following advice:

• Purchase a fully integrated practice management system and EHR. Do not buy separate systems in the hope that they will always work well together. Make sure the integrated system supports the full set of HIPAA transaction standards, appointment scheduling, patient reminders, electronic eligibility verification, advanced claims editing (including health savings accounts), automated payment posting with electronic remittance advice, integrated credit card processing, configurable reporting, the ICD-10 code sets, and, if necessary, specialized Medi-Cal claims processing that addresses medical home requirements. In addition, do not forget to research the ability of the system to interface with health plans and clearinghouses.
• Do not waste your time on standalone e-prescribing — you are only going to have to dump it later for an EHR. Remember, the incentives from Medicare for e-prescribing drop to 1 percent in 2012, to 0.5 percent in 2013, and then they disappear.
• Pick an EHR suited to your specialty. Get advice from your colleagues and your specialty society. For example, voice recognition in the EHR is often a big plus for surgeons and enables savings on transcription costs. Look for software that automatically flags common tasks that are unique for your specialty (e.g., cancer screenings for internists and family practitioners).
• Vendor Reputation: Pay attention to the vendor’s track record for service and support.
• Interoperability: If possible, find an EHR that can receive data from your preferred lab and hospital and deliver patient-specific data into the correct field in each of your patient’s electronic chart.
• Application service providers using a subscription model for maintaining and servicing your office is the best approach for physicians in small- and medium-sized practices.
• Workflow Planning, Staff Training, and Implementation: An experienced vendor will work with physicians and their staff to map out the ideal workflow for the office AND develop a carefully planned out schedule for training and implementation. Physicians should not underestimate the time or importance of these efforts.
• Check the 2008 Best in KLAS Awards based on customer satisfaction with healthcare information technology vendors and consultants.