ARRA Opportunities and Risks
More is unknown than known about how the $19.2 billion allocated to health IT by the American Recovery and Reinvestment Act of 2009 (ARRA) will be awarded and who will be eligible to receive funds. Anyone interested in participating in the reinvention of health care through IT—including radiology private practices and hospital radiology departments—should begin planning a strategy immediately and take an active role in defining the terms contained in the legislation. That was the message of Charles Christian and Howard Burde, JD, who copresented A Strategic Approach to Managing Opportunities and Risks for Health IT in Economic Stimulus at the Healthcare Information and Management Systems Society (HIMSS) meeting in Chicago on April 6, 2009. Christian is CIO and health systems manager of Good Samaritan Hospital, Vincennes, Ind, and chair of the HIMSS board of directors. Burde is a partner and health law practice group leader at Blank Rome, LLP, Philadelphia, and a HIMSS board member. “The act not only authorizes the funds, but it also appropriates the funds: The money is there,” Christian says. “We don’t have to go through another appropriations process because this was classified as a piece of emergency legislation. The questions that are going to be answered for us in the next weeks and months are who has the money, where is it, how do I get on the list, and how do I line up my organization to get access to it?” Burde, representing the voice of caution, adds, “The ARRA is, if nothing else, an extraordinarily ambitious law. It fundamentally changes health IT. Health IT has gone from an essential component, a supporting backbone to our health care system, indirectly regulated, not funded—but there and important—to a directly and heavily regulated, heavily subsidized industry of its own, and it happened in minutes.” While regulators grapple with the many puzzles contained in the act (including definitions of the meaningful use of health IT; of the qualified, certified electronic medical record [EMR]; of the minimum necessary information transmitted for payment; and of the eligible professionals who are qualified to participate), Christian tells providers to begin preparing now to participate in the program. Burde offers a more skeptical assessment of the situation. “They could make meaningful use so burdensome and so difficult that providers will have a tough time complying and, therefore, a tough time drawing down Medicare and Medicaid funds,” he says. The Opportunities In addition to the $19.2 billion allocated for health care IT in the ARRA, Christian identifies a number of additional sources of funding contained in the act:
  • $87 billion to help shore up state Medicare programs;
  • $10 billion to be awarded by the National Institutes of Health for research in cancer, heart disease, and other diseases, including $1 billion to study comparative effectiveness of medical procedures, pharmacological treatments, and medical devices;
  • $85 billion for Indian Health Services;
  • $1.5 billion for community health centers to be administered through the Health Resources and Services Administration;
  • $500 million for the Social Security Administration;
  • $50 million for the Veterans Benefits Administration;
  • $2.5 billion to be administered through the Department of Agriculture’s distance learning and telemedicine broadband program; and
  • $4.7 billion for the National Telecommunications and Information Administration for broadband technologies and opportunities.
“There is a significant amount of money that’s been set aside that is not necessarily contained just in the $19.2 billion directly related to health care IT—other significant funding that we are looking at, as a community hospital and a state,” Christian notes. The Medicare and Medicaid health IT incentives alone—which will be distributed through the states—could add up significantly for both hospitals and physicians. Using a tool on the HIMSS Web site, Christian calculated potential awards over the four-year period of the program. He says, “A 75-bed hospital, for 2011 through 2014, stands to reap $3.5 million: That’s probably twice what its annual bottom line is.” A 250-bed hospital has the potential to earn almost $6 million over four years, and a 750-bed hospital could qualify for nearly $12 million, he reports. “Keep in mind that the calculations depend on two variables,” Christian explains. “One is how many Medicare days you have, because this is a Medicare incentive. It also considers how much charity care you have. The more charity care you provide, the higher your incentive payments are going to be.” Eligible single-physician practices can potentially be awarded $44,000 over four years; multiple-physician practices can multiply that figure by the number of physicians in the group, Christian says. According to the language of the act, eligible professionals can include physicians, dentists, certified nurse-midwives, nurse practitioners, and physician assistants. Hospital-based professionals, such as anesthesiologists, pathologists, and emergency-department physicians, are not classified as eligible professionals under the stimulus package. Both hospitals and physician practices will need to calculate whether their Medicare or Medicaid payments are higher before applying for funds, because it is one or the other, not both. “If you raise your hand and take the Medicaid provisions, you forfeit the Medicare provisions,” Christian explains. “You have to do the math, particularly in relation to physician practices. If you have a higher Medicaid population, you will fare better from the stimulus using the Medicaid calculations than you would using the Medicare calculations.” Critical access hospitals have an additional provision that allows them to frontload all of their depreciation for health care IT purchases in one year, Christian says. Those eligible hospitals and physicians electing not to participate will risk penalties. “Remember, the money is a carrot, but there comes a stick,” Christian notes. Hospitals could put 75% of their market-basket update at risk. Physicians would forfeit 1% of their reimbursement for three years, and if the yet-to-be-confirmed secretary of HHS deems that at least 75% of physicians are not participating, he or she can increase that to 5%, Christian says. The Risks The money comes with strings attached. The act’s intention is to improve health care IT through the appropriate application of technology, which will require a great deal of process re-engineering. “If there is anyone in the audience today who thinks just installing technology is going to fix the problem, we need to have a conversation,” Christian says. “I promise you this is not going to be administered like the bank bailouts. The health care industry is actually expected to do the work, and illustrate the outcome of that work, before we are going to have access to a nickel of this money. I doubt very seriously that there’s anyone in this room that is going to be eligible for a bonus payment if we don’t hit the target.” Burde says that heath care IT vendors and users are now subject to regulatory enforcement by the Securities and Exchange Commission, the Justice Department, and state attorneys general. “Any time there is a large amount of federal money being distributed for federal purposes, the assistant US attorneys get to use their favorite law, which is the False Claims Act,” he reminds us. Providers must get involved in defining the terms and language contained in the act or risk being very disappointed with the results, Burde warns. “What does a provider need to do to access information?” he asks. “There were suggestions in the drafting of the law, by payor and privacy advocates, that any time a doctor or nurse accessed information, he or she had to put a reason in the field. Can you imagine having to put a reason in a field any time an EMR is accessed? What would that do to our workflow and our treatment processes? How many fewer patients would be treated every day?” In passing the legislation, legislators have enacted a number of changes to HIPAA, most notably in enforcement and in the direct application of the security and privacy provisions to business associates. “The ARRA imposes the administration of physical and technical requirements of security on business associates as if they were covered entities,” Burde explains, requiring a thorough review and probably replacement of current business associates’ agreements, which may no longer be valid. “One little-noticed part in the section on breach notification is that covered entities get to decide who does the notifying,” Burde says. “When business associates and covered entities define their relationship, they’d better be sure to specify who is responsible for the notification of breach. The default, under the law, is the covered entity saying to its business-associate health IT vendor, ‘No, you do it. We don’t want the black eye; we don’t want the administrative headache.’” It is Burde’s contention that the ARRA will redefine health care operations, particularly in how information is moved. He notes, “Health care operations are redefined both by what is in the ARRA and what is going to be filled in by regulators. How data flows and how information moves will be defined. There are plenty of people who would like to stop the pipeline completely, whatever their reasons. You and I may think that is lousy public policy, but we can’t let others determine, without our input, how operations will be defined.” Conclusion Christian urges providers to begin planning now (see sidebar, page 14) to prepare their organizations to participate. “It’s not time to sit on the sidelines and see what’s going to happen next,” he advises. “The funding that is directly focused on hospitals and physicians will be provided in incentive payments after we can illustrate meaningful use. Before we can do that, we have to know what the definition will be. Several workgroups at HIMSS are trying to determine what meaningful use is.” Christian recommends weighing in on the discussion group on the HIMSS Web site. Burde says, “The ARRA is a wonderful opportunity for us, and the opportunities are not just about the money. The money is there, and that’s great, but we are given a second chance here to redefine how we approach not just compliance, but the laws that have an impact on how we work, day to day.” Christian and Carla M. Smith, HIMSS executive vice president, both express the opinion that radiology private practices and hospital-based departments potentially will be eligible to receive ARRA funds. “Some radiologists do have private practice, so once again, it is gray, and it is not clear if radiologists would be included or excluded,” Smith states. “They are not specifically named in legislation as an excluded entity.” Christian adds, “It is a significant gray area that needs to be defined. If they practice exclusively in the hospital, radiologists would not be qualified as eligible providers.” Christian also thinks that hospitals interested in adding or upgrading a PACS, RIS, or other radiology-specific information system potentially can justify those purchases through Medicare incentives. Additional Reading - Ten Steps to ARRA