Wednesday, November 17, 2010

Health Information Exchange Sustainability

As Massachusetts works through Health Information Exchange governance, use cases, and procurement to connect all stakeholders in the Commonwealth, it must ensure sustainability by attracting funding from both the public and private sector.    What are possibilities?

Subscription based on value realized  - The New England Healthcare Exchange Network (NEHEN) model over the past 13 years has been based on cost avoidance.   It used to cost $5.00 per claim to support phone/fax/email/paper workflow.   It now costs 25 cents.   NEHEN was funded in its first decade by gain sharing - payers and providers funded HIE by contributing a small portion of their savings.    We found that subscription models encouraged adoption and innovation since increased data flows meant more value for the subscription fee.   Novel uses emerged such as scanning all payers simultaneously to identify eligibility for patients with multiple or ambiguous coverage.  Subscription fees for  e-Prescribing and clinical exchange are now justified by meaningful use requirements, pay for performance programs, and evolving accountable care organization needs.

Transaction fees - In some states, transaction fees have worked because each transaction creates a cost savings.   If it costs you $1.00 to print a lab result and put it in an envelope but only a 20 cent transaction fee to send it electronically, you'll be motivated to accept the transaction fee and pocket the 80 cent savings.

Assessment - Some states have assessed a temporary fee, such as .1 cent per claim, to generate the revenue to build HIE capabilities.

Public funds - since states can run their Medicaid operations more efficiently with automated administrative transactions, care coordination, diseases management, all payer databases etc. they are motivated to invest in HIE construction and operation.   Also, given the 90/10 Federal match for Medicaid system enhancement, states can realize substantial benefit through strategic HIE investment.

Bonds - some states have thought about HIEs like highways.   A bond measure funds the construction, then "tolls" are charged to pay back the bond.   This is a variation on the transaction fee model.

Ultimately the HIE needs to have the trust of the community to encourage investment by all stakeholders.   Massachusetts has 10 million in ONC funds for HIE but likely about $50 million in HIE work to connect every stakeholder.   That means that $40 million dollars in private sector funds need to be committed to HIE activities over the next few years.   NEHEN already attracts $7 million from Eastern Massachusetts and connectis half the providers in the state.   If we want to achieve a connected state by 2013 that means our funding gap is $50 million - (3 years * 7 million in private funds + $10 million in ONC funds)  = $19 million.

As we complete our governance, vision, use cases,  procurement, and a sustainability model, we'll be able to move forward in the next few months.  My goal is to maintain the leadership we've shown in HIE and share our experience with the nation for the benefit of all.
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