HIEs could cut billions in Medicare spending if implemented nationally

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Health information exchanges could cut billions of dollars in Medicare spending if they are implemented nationally, according to new research from the University of Notre Dame.

The study, which has been accepted for an upcoming issue of Information Systems Research, demonstrates that when HIEs are created in regional markets around the country, they realize substantial cost savings for the Medicare program.

“We find significant cost reductions in healthcare markets that have established operational HIEs, with an average reduction in spending of $139 (1.4 percent decrease) per Medicare beneficiary per year,” states the paper.

According to Idris Adjerid, a co-author and professor in the IT, Analytics and Operations Department at Notre Dame’s Mendoza College of Business, these savings equate to a $3.12 billion annual reduction in spending if HIEs had been implemented nationally in 2015, the latest year for which complete Medicare spending data was available.

Adjerid contends this is the first study to “use nationally representative samples and robust approaches to show that HIEs are having a meaningful effect on healthcare spending.”

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“We also find that these reductions occur disproportionately in healthcare markets where providers have financial incentives to use an HIE to reduce spending and when HIEs are more mature,” write the authors.

Adjerid contends that “policymakers and healthcare entities need to ensure that financial incentives align with the goals of HIEs and give them sufficient time to mature before expecting promised value.” Ultimately, whatever model is adopted, he believes the strategy should be to incentivize providers to reduce costs by sharing the benefits.

“We think those kinds of incentive approaches are going to help HIEs create even more value,” concludes Adjerid.

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