Analyst: Stop HITECH Payments to Lower Vendor Interop Fees

The federal government should avoid the temptation to regulate how much EHR vendors charge providers for interoperability, and should instead curtail HITECH incentive payments, according to a Brookings Institution policy analyst.

"The best solution for the government is to do nothing," Brookings Fellow Niam Yaraghi wrote in a blog post examining the issue. "The new pay for performance payment methods in which the medical providers are being paid a fixed amount for treating patients would drive them to become more efficient and increase their profit margin by seeking solutions such as health information exchange to cut costs. Because the market for new EHR products is now saturated, the only revenue source for EHR vendors are charges for data exchange. Currently, they can get away with outlandish charges because they know the incentives from the federal government allow doctors to cover their costs.”

Former National Coordinators for Health Information Technology speaking earlier this month in a panel session at ONC’s Annual Meeting in Washington expressed the opinion that the main challenges for the nation’s health IT interoperability are not technical but business related. Farzad Mostashari, M.D., former National Coordinator for HIT, warned that business practices among some EHR vendors are inhibiting the sharing of health information by restricting information exchange with users of other EHR products.

“It’s better for the vendors, frankly, if they get paid for every interface,” Mostashari asserted. “Standards were going to reduce the cost of interfacing. Will they reduce the price is another question. I still have my practices paying $10,000 for a C-CDA interface.”

While the temptation to regulate EHR vendors' moves may sound like a sound strategy, Yaraghi says the payoff would be delayed and negligible.

"The benefits of regulating the EHR industry, if any, will take a very long time to become tangible," he wrote. "The EHR vendors will furiously push back against any kind of regulation and will insist that technical challenges are a real barrier to interoperability. Congress is poorly situated to adjudicate this claim. Time is a critical factor in the long term success of HITECH plans, which threatens the viability of this strategy."

Instead, Yaraghi argues that, with the original goal of HITECH being met—that the use of EHRs has become the norm rather than the exception—the incentive payments should be stopped.

"A big chunk of the MU stage 3 incentives will end up paying EHR vendors and therefore will not incent physicians to actively engage in health information exchange," Yaraghi told Health Data Management in an e-mail. "Given the current situation, these incentives would never have the intended effects since a big part of them will be wasted on paying EHR vendors rather than physicians. I think the government (should) stop the HITECH incentives. If these incentives were to disappear, the EHR vendors would do anything they can to make a fair deal with providers and payers for their exchange fees. ONC will most likely continue to spend the money, but we should not expect a tangible return on the investment."

Yaraghi's full blog post is available here.