It’s not as trendy as Twitter or as headline-grabbing as Myspace, but health information technology is getting something that they won’t be getting – a massive infusion of federal cash.

Pushed to the back pages a bit in the attention given to the recently signed federal stimulus legislation (H.R. 1) are the provisions that aim to give a huge push to the adoption of electronic health records (“EHR”) and thereby improve health care quality, prevent medical errors, and reduce health care costs, among many other projected benefits identified in the bill.

The federal push for the adoption of electronic health records is backed up with a projected near-$20 billion in federal funds over the next half-decade, making health IT a likely an area of major growth for technology providers.

Show me the money!

H.R. 1 addresses health information technology in the “Health Information Technology for Economic and Clinical Health Act’’ (HITECH Act). H.R. 1, §§ 13001-13424, and in amendments to the Medicare and Medicaid provisions of the Social Security Act. H.R. 1, §§ 4001-4302.

In partial summary, the HITECH Act includes programs for the awarding of grants and loans and the establishment of programs to provide assistance to a wide range of health care providers in the adoption of electronic health records technologies. The Act establishes an Office of the National Coordinator for Health Information Technology , enables the establishment of an HIT Research Center and regional research centers to assist in the adoption of technologies via research, testing and informational activities , and provides a regulatory framework for the adoption of standards for the certification of electronic health records technologies that will be eligible for assistance. These and related activities have been funded by an initial $2 billion appropriation.

The amendments to the Social Security Act provide financial incentives directly to certain health care providers for the adoption of and improvements to health IT systems. The amount that will be available for these reimbursements is estimated to be as much as $17 billion.

Privacy provisions

The HITECH Act provisions of H.R. 1 also address various privacy issues related to electronic health records. For example, the Act includes provisions that require entities covered by the Health Insurance Portability and Accountability Act (HIPAA) and their business associates to report breaches in the security of protected electronic health information. There are also data security breach provisions directed at the emerging phenomenon of personal health records providers. The data security breach provisions are discussed more fully in this post on the Proskauer Privacy blog.

Benefits to health care providers

Some of the stimulus funds will flow directly to “health care providers,” broadly defined in the grant and loan-related provisions of the HITECH Act to include providers ranging from hospitals, nursing care facilities and clinics, to group practices, pharmacists, laboratories and individual physicians, among others. Such providers will be eligible to apply for loans to finance the purchase of “certified EHR technology” (as defined in the Act and discussed below), or to enhance the utilization of or upgrades to such technology, or to train personnel or improve the security of such technology.

Money will also flow to certain providers in the form of reimbursements. In amendments to the Social Security Act, H.R. 1 uses a “carrot and stick” approach, in that the amendments provide for increases in Medicare and Medicaid reimbursement rates for hospitals and for certain physicians that implement “meaningful use of certified EHR technologies.” The stick is that in future years reimbursement rates of providers that fail to implement EHR will be decreased.

Potential benefits to health care technology providers

Downstream from the health care providers themselves, current providers of health information technology are likely to be the best situated to benefit from the federal dollars that will be poured into electronic medical records adoption. But generic technology providers, such as providers of database and storage technology will likely benefit as well. Some commentators have predicted that a wave of mergers and joint ventures that will see smaller or more narrowly focused health information technology providers joining up with larger enterprises to take advantage of the business that the legislation will generate.

Another set of technology provider beneficiaries that may benefit are those that provide cloud computing technologies. Granted, the term “cloud computing” encompasses a lot of territory, but entrants in the race to develop and deploy cloud computing technologies that facilitate data exchange and interoperability among networks are likely to find opportunity. One of the purposes of the HITECH Act is to promote “the electronic exchange and use of health information and the enterprise integration of such information.” What does that mean? “Enterprise integration” is defined in H.R. 1 as “the electronic linkage of health care providers, health plans, the government, and other interested parties, to enable the electronic exchange and use of health information among all the components in the health care infrastructure….”

Potential benefits to academic institutions and non-profits

H.R. 1 also contains a number of provisions under which academic institutions and non-profits can become involved in the EHR initiative. For example, the legislation provides funding for the establishment of “health information technology regional extension centers” to provide technical assistance and disseminate best practices and other information. These centers will be affiliated with non-profits that apply for funding and are chosen on a merit basis. The legislation fast-tracks the promulgation of grant eligibility standards at 90 days following the enactment of the legislation , so potential applicants should not delay in their preparations and should be on watch for the release of the standards. Grants are also available to states for implementation activities, and the states are empowered to delegate planning and implementation activities aimed at encouraging the proliferation of electronic health records technologies to non-profit institutions.

Academic institutions may also be eligible for grants for demonstration projects aimed at developing academic curricula aimed at integrating certified HER technology in the clinical education of health professionals, or for assistance in establishing or expanding “medical health informatics education programs” for both health care and information technology students. That’s a fine point in the legislation that you may want to share with your graduating senior who is considering what career path to pursue in a difficult economic climate.

The catch

As noted above, only “certified EHR technology” is eligible for the benefits provided in H.R. 1. Such technology must meet federal standards that are “voluntary,” but tying loans and grant funding to certification under these standards is likely to render the standards voluntary in theory only. Consequently, information technology providers that want to get their technologies certified should play close attention to the standards-setting process.

The standards-setting process will be directed by the National Coordinator for Health Information Technology, a position first established in 2004 by Executive Order and re-established in H.R. 1. The post was recently filled with the appointment of David Blumenthal, M.D., M.P.P. The Coordinator will receive recommendations on HIT infrastructure and standards from the HIT Policy Committee established under the Act. While a standard-setting process for electronic health information technology was begun in the previous administration, the new legislation is intended to put that process into high gear. A date of October 31, 2009, is set for the adoption of an initial set of standards that will cover, among other things, technology that will satisfy the provisions in the HITECH Act data security breach sections concerning privacy and security of health information.




Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Jeffrey Neuburger Jeffrey Neuburger

Jeffrey Neuburger is co-head of Proskauer’s Technology, Media & Telecommunications Group, head of the Firm’s Blockchain Group and a member of the Firm’s Privacy & Cybersecurity Group.

Jeff’s practice focuses on technology, media and intellectual property-related transactions, counseling and dispute resolution. That expertise…

Jeffrey Neuburger is co-head of Proskauer’s Technology, Media & Telecommunications Group, head of the Firm’s Blockchain Group and a member of the Firm’s Privacy & Cybersecurity Group.

Jeff’s practice focuses on technology, media and intellectual property-related transactions, counseling and dispute resolution. That expertise, combined with his professional experience at General Electric and academic experience in computer science, makes him a leader in the field.

As one of the architects of the technology law discipline, Jeff continues to lead on a range of business-critical transactions involving the use of emerging technology and distribution methods. For example, Jeff has become one of the foremost private practice lawyers in the country for the implementation of blockchain-based technology solutions, helping clients in a wide variety of industries capture the business opportunities presented by the rapid evolution of blockchain. He is a member of the New York State Bar Association’s Task Force on Emerging Digital Finance and Currency.

Jeff counsels on a variety of e-commerce, social media and advertising matters; represents many organizations in large infrastructure-related projects, such as outsourcing, technology acquisitions, cloud computing initiatives and related services agreements; advises on the implementation of biometric technology; and represents clients on a wide range of data aggregation, privacy and data security matters. In addition, Jeff assists clients on a wide range of issues related to intellectual property and publishing matters in the context of both technology-based applications and traditional media.