STATES TURNING TO ELECTRONIC HEALTH RECORDS TO SAVE MONEY, IMPROVE QUALITY

Volume 28, Issue 484                                             February 5, 2007

Matthew Gever

Developing an electronic health records (EHRs) system can be enormously expensive and time-consuming. But the dividends can be even larger, according to many experts on the subject. “Health information technology has been demonstrated to save lives and reduce health costs," said Massachusetts Sen. Richard Moore. "If states work toward encouraging investment in health information technology, the dividends for all Americans are enormous.”

Take the Veterans Health Administration (VHA). Its Veterans Health Information Systems and Technology Architecture (VistA), a central database that stores medical information on patients, saves money and improves patient care by allowing providers to securely access a patient’s information at the point of care, as well to update the patient’s medical history. An article in the January 2007 Health Affairs estimates that VistA costs $80 per patient per year—almost exactly the same amount of money saved by eliminating just one redundant lab test for one patient.

States can use the VHA’s VistA as a model to create EHRs in Medicaid and other programs, according to Lynn Etheredge, a consultant to the Rapid Learning Project at George Washington University. “This is the future of health care,” Etheredge said at a conference sponsored by the HMO Kaiser Permanente and The Robert Wood Johnson Foundation.

The VistA system is credited with much of the VHA’s turnaround on quality.  “If you go back 10 or 15 years, the VA was considered to be at the bottom rungs of American medicine,” said Etheredge. Facing increased scrutiny, in the mid-1990s the VHA reorganized itself, creating the VistA system in the process. “Today…they are probably among the very best systems on over 250 measures of quality,” Etheredge said. Over the course of VistA’s implementation, the number of patients seen by the VHA has increased from 3 million to 5 million, while per patient costs have decreased.

States Moving Ahead

The feds are far from the only ones moving toward EHRs. By the fourth week of January 2007, legislation relating to EHRs had been introduced in 14 states. In Florida, H 565 directs the state to contract with a vendor to design a database of EHRs for Medicaid providers. A bill in Hawaii (SB 977) would fund two new academic clinical practices to provide a pipeline of family physicians. The practices must include EHRs, which the bill says are one of the “minimum critical elements necessary for…graduate medical education.” West Virginia’s HB 2177 would provide tax credits to medical providers in an amount equal to their investment in EHRs. And California’s universal health care bill (AB 53) declares that the state will help establish EHRs that are compatible across systems.

Missouri recently passed a bill (SB 858) to create a $25 million Healthcare Technology Fund. Beginning in FY 2007, the Show Me State will use $3.4 million from the Technology Fund to develop Cyber Access, a centralized database containing the EHRs of the state’s Medicaid clients.

“It is unacceptable in the 21st century that Jiffy Lube is more technologically advanced than our health-care system,” said Sen. Michael R. Gibbons. “Paper kills and we must move to a system where electronic medical records and e-prescribing are common place.”

CyberAccess will enable health-care providers to electronically prescribe, collect diagnosis data, review patients’ medical histories, receive alerts, select appropriate medications and request drug and medical prior authorizations.

Sen. Charlie Shields noted that CyberAccess also will help state officials combat fraud by distinguishing “those who steal from the people who really need help.” Currently, 700 Missouri physicians (who already own computers) are enrolled in the program. State officials expect to enroll up to 3,000 providers, including community and rural health centers.

Not All is Rosy

States that want to set up EHR systems have many hurdles to surmount. Smaller providers generally do not have the funds to develop their own networks or central databases. One way states can deal with this is to develop a central server and allow providers to link to it,  said Etheredge.

States can reduce their own costs in creating the systems by using the 90 percent match that Medicaid provides for administrative costs, which includes investment in computerized technology, said Etheredge. He also pointed out that the national Medicaid Management Information System—the automated claims processing and information retrieval system for handling all Medicaid transactions—is being restructured to produce centralized EHRs.

Patient privacy and confidentiality also can pose problems. The Health Insurance Portability and Accountability Act deals with many of these issues by, for example, providing for the use of databases without personally identifiable information and giving patients the right to exclude information from their EHRs.

Etheredge believes that states are still a few years away from fully developing comprehensive EHR systems, as many are starting from scratch and federal rules can change. Nevertheless, thanks in part to EHRs, “Medicaid could become a national leader in quality and cost-effectiveness,” he said.

NCSL provides state legislators with information and technical assistance on health information technology and health information exchange through its 18-month Health Information Technology Champions (HITCh) program. For more, go to www.ncsl.org/programs/health/forum/hitch/

Contact Kala Ladenheim, program director, Forum for State Health Policy Leadership, at 202-624-3557 or Kala.Ladenheim@NCSL.org