The National Health IT Czar Does Not Need A Big Budget Hike

A similar version of this Health Alert appeared at Forbes.

One overlooked “ask” in the President’s 2015 budget was a 25 percent hike in the budget of the Office of the National Coordinator of Health Information Technology (ONC). Admittedly, it is a small amount of money, $75 million. Nevertheless, it is a 25 percent hike in a budget that should be reduced.

Although the costs of operating the ONC are small, it has an outsized role in determining how health information technology (HIT) is being deployed. HIT includes a wide range of products, technologies, and services, such as electronic health records (EHRs), mobile and telehealth technology, cloud-based services, medical devices, and remote monitoring devices, assistive technologies, and sensors.

The experience of the ONC in its first few years of existence warns against allowing it to exert too much control over HIT. In 2004, the ONC was originally envisioned as the “coordinator” of HIT. However, in 2009, the ONC became the financier, certifier, and regulator of much of HIT. The federal government allocated a 5-year budget of $30 billion to disburse as incentives to hospitals, physicians’ offices, and other health facilities, as encouragement to install electronic health records (EHRs). ONC was given the power to certify EHRs that would qualify providers for the incentive payments.  A new NCPA study concludes that this has proven expensive, unproductive, and potentially harmful, which leads to the conclusion that the federal government should play a minimal role in guiding HIT over the next decade.

The most influential report on HIT was issued last year by an independent scientific group known as JASON. Referring to the rapid transition from paper to electronic health records, the report concluded that: “Furthermore, there are questions about whether that transition will actually improve the quality of life, in either a medical or economic sense.”

“Meaningful Use” of ONC-certified EHRs is what triggers the incentive payments. At a September 2014 meeting of the Administration’s Health IT Policy Committee, the Administration disclosed that only 3,154 eligible professionals (doctors, dentists and so forth) had attested to the second stage of meaningful use to get their bounties from the federal government for installing EHRs. Only 143 hospitals had attested.

Doctors are learning the incentive payments do not cover the true costs of installing EHRs, which includes a loss of productivity, according to a January 2015 survey of almost 2,000 physicians conducted by SERMO (an online community of physicians). Of those surveyed, 55 percent said they would not attest to the next stage of meaningful use this year.

A major objective of the EHR incentive program is that EHRs be “interoperable” – that they communicate with each other. However, according to an August 2014 analysis only 10 percent of ambulatory practices and 30 percent of hospitals were found to be participating in operational health information exchange efforts.” Indeed, evidence from congressional investigations suggests that meaningful-use bounties have encouraged the adoption of EHRs that are deliberately closed to exchange with other parties.

Even worse, the administration has started penalizing providers who do not follow the plan (Wall Street Journal, gated). Last December, CMS announced that it would dock one percent of Medicare payments to 257,000 physicians for not using EHRs “meaningfully” and another one percent from 28,000 providers for not prescribing electronically. In October, CMS announced fines of one percent for about 200 hospitals.

Federal influence has resulted in an EHR industry has not been as vibrant as it could have been under free-market conditions. In 2012, only five EHR vendors accounted for over 50 percent of market share, leading to the expert comment that “There is concern that the EHR market, itself, represents a barrier to innovation.”

The importance of returning to a laissez-faire approach is especially high now, as the integration of patients’ digital data from multiple sources becomes the next stage of HIT development.

For this integration to succeed, the federal government must resist the temptation to play the central role, as it has done with EHRs. Interoperability across devices requires not only common mark-up language but Application Program Interfaces (APIs) that will allow third-party developers to make the links between systems. Of course, even ordinary people recognize that this is how our smartphones have become so powerful within the last few years – absent government subsidy or certification.

The ONC’s power and budget need to be limited so that the rest of our emerging HIT ecosystem does not suffer the same fate as EHRs have over the past five years.

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