Stimulus funds will build state health exchanges but might not sustain them

Doctors are using computerized health records to keep track of patient information. Emma Schwartz/iWatch News

$548 million in recovery grants will run out by 2015

Federal stimulus funds are paying to build or expand systems enabling healthcare providers within each state to share patient information, but state officials are concerned about how to keep paying for the programs once the federal money runs out, an iWatch News survey reveals.

And with states adopting a wide variety of different software for electronic health record exchange, officials are also worrying about how to get those different systems to talk to each other across state lines.

The creation of these exchanges within all U.S. states and territories is part of a much larger push for use of electronic records in healthcare. Most of the attention has been focused on $27 billion worth of Medicare and Medicaid incentive payments that are going out to doctors, hospitals and clinics for switching their patients’ information from print to digital; providers must also demonstrate they have followed government guidelines in using the technology in a “meaningful” way. But a less-noticed provision of the same 2009 stimulus legislation made $548 million worth of grants available to the states to set up information exchanges that would allow healthcare providers to send, receive and share patient information within a state.

The federal government started distributing the State Health Information Exchange Cooperative Agreement Program grant money in March 2010 after approving each state’s proposal. But the funding will be handed out in increments until late 2014 or early 2015.

The purpose of the exchanges
Ideally, the exchanges would allow providers within a given state to track their patients’ medications, allergies, medical history, tests administered at other facilities and surgeries by other physicians — therefore improving healthcare overall and lowering the risk of error or duplication.

Rather than establish one national exchange or mandate for any one particular approach, the federal Office of the National Coordinator (ONC) for Health Information Technology asked each state and territory to propose a plan for a state exchange that would meet its needs.

Pam Matthews, senior director of regional affairs at the Healthcare Information and Management Systems Society (HIMSS), a nonprofit that promotes understanding and use of health information technology, said there wasn’t a “best model” or approach that could apply to all state exchanges. “Each state is unique and their [exchanges] will mirror their unique state characteristics, needs and requirements,” she said.   

First steps
While most states are establishing these exchanges from scratch, about half a dozen had exchanges in place before the stimulus announcement. Those were built with a mixture of state and private funding.

An iWatch News survey of state health information exchanges suggests that states in the nascent stages are using the vast majority of available federal dollars to cover the considerable costs of envisioning, designing and implementing the program. Huge percentages of the funds are going to software vendors to pay for the technology infrastructure, meaning states will have to find other revenue sources for long-term sustainability. Fifty-one U.S. states and territories responded to questions about the progress their agencies or nonprofit entities have made toward meeting the benchmarks in their proposals to ONC; representatives from the District of Columbia, Mississippi, Northern Mariana Islands, New Jersey and Oklahoma did not respond to repeated requests for comment.  

The answers revealed that some are further along than others, but all who did respond expect to have a working exchange by the end of 2014 or beginning of 2015.

Ohio, which did not have an exchange in place before the program began, has used the funding to hire Medicity, a Utah-based technology firm, to build its platform. “Our biggest need has been financial, and ONC is supplying that for us,” said Dan Paoletti, CEO of the Ohio Health Information Partnership, the non-profit designated by the state to coordinate the effort. “Were it not for invaluable funding from the federal government, we could not have accomplished what we’re doing today,” he said.  Ohio received a grant of nearly $15 million from ONC for its exchange.

Maine began creating its system in 2006 and used a combination of foundation and state funding.  “All of this was made possible by voluntary funding stream,” said Jim Leonard, director of the office of the state coordinator for health information technology in Maine. The federal funds allowed the state to get more healthcare providers signed on and allowed them to upgrade to more sustainable technology. “If the stimulus funds hadn’t come along, it’s unlikely that the project would have continued,” Leonard added.   

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