What's next for state HIEs after federal grants run out?

New business plans emerging as regional and state HIE leaders struggle to develop sustainability models.

BOSTON -- Regional and state HIE leaders will be swapping from 90:10 federal-to-self-funding ratios to 10:90 in the coming months. Leaders for several HIEs shared their plans for financial sustainability -- for both creating service value and keeping technology costs down -- at the Medicaid Enterprise Systems Conference.

Payers, it turns out, can be persuaded to kick in funds to support health information exchange (HIE) services if it turns out those services can reduce overall health care costs. HealthShare of Southeast Pennsylvania recruited payers by developing specific use cases for its regional HIE services and presenting them to prospective payer and provider customers.

More coverage of
state HIEs

Differing states' consumer, patient privacy laws complicate interstate HIE.

A multi-state interoperability workgroup is trying to iron out those issues.

The cloud model for state HIE might end up being more cost-effective.

Before it did that, HealthShare created detailed value analyses of these use cases, such as how effectively using discharge summaries could reduce patient readmissions. Giving prospective customers data empowered them to make the case for investing in HealthShare when meeting with their CEOs and CFOs.

"It was really focused on the financial side, [but] looking at market demand was key as well," said Rick Zelznak, principal for North Highland, a consultancy HealthShare hired. "The payers said they'd be willing to pick up two-thirds of the costs, and the providers said they'd be willing to pick up the balance."

The state of Pennsylvania funneled grant money from the Office of the National Coordinator for Health IT (ONC), one of the agencies overseeing information exchange initiatives, into the project to get it started. Down the road, state Medicaid funds may support the infrastructure to help serve Medicaid recipients.

Illinois outsources state HIE infrastructure

Illinois, which by some accounts has endured a worst-in-the-nation budget crisis, had difficulties ponying up its 10% share of state HIE funding in order to receive the federal grants in the first place, said Ivan Handler, CIO of the Illinois Department of Healthcare and Family Services. "We're in a difficult situation, I think that's true with many states," he said.

The state HIE is no longer just a cost center. It becomes a combination cost and revenue center.

Ivan Handler,
CIO, Illinois Department of Healthcare and Family Services

So, instead of building the HIE from within and hiring the programmers and master's degree informaticists the project would require -- and the state can't afford -- Illinois outsourced the secure infrastructure to InterSystems Corp.

Handler and his colleagues hope to sustain the HIE by selling health data transport services -- it will not store clinical data itself, just move it -- while maintaining HIPAA-compliant privacy and security. The state will rely on private-sector companies to compete with one another to develop services (apps) and use the HIE as a platform upon which to offer them.

"The state HIE is no longer just a cost center," Handler said. "It becomes a combination cost and revenue center."

In this somewhat theoretical model, as it's still under construction, private software developers and the state share revenues. The state, however, doesn't maintain the customer service relationships with the health care providers themselves. Therefore, the state won't succeed or fail on that front; private companies will assume that risk, and if they fail, a competitor, replaces them.

Federal official offers more ideas for HIE services

HIEs should look at payers' business needs, determine how an HIE can enable efficiencies in their processes and help save costs, and develop use cases for services around them. Think beyond patient care coordination, which tends to be the classic health care application for HIE, said Jessica Kahn, health IT technical director at the Centers for Medicare & Medicaid Services (CMS).

The examples she gave centered upon improving data workflows between providers and payers currently mired in paper: patient admissions, provider credentialing and enrollment, potential fraud and abuse detection, and improving claims documentation.

Kahn believes HIEs can serve payers -- and some large providers -- in these "non-sexy" ways that might not be obvious upon first blush. She encouraged HIE leaders to approach payers and begin by asking them, "How do you move data now, administratively and clinically?" Then HIEs can figure out ways to move data electronically that would be otherwise impossible for stakeholders.

"Everyone feels all warm and fuzzy about the care coordination," Kahn said. "We get it, it's the right thing to do -- but that's not what [payers] have to tell their shareholders or their boards. They have to tell their shareholders or their boards, 'I have to scan and fax these things now ... or send them [to the] U.S. Postal Service. ...' Talk about that stuff."

Let us know what you think about the story; email Don Fluckinger, Features Writer or contact @DonFluckinger on Twitter.

Dig deeper on Health information exchange implementation and management

Pro+

Features

Enjoy the benefits of Pro+ membership, learn more and join.