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Effective HIE Use, Federal Incentives May Save Medicare Billions

Evidence shows mature HIE use and well-aligned federal incentives could save Medicare $3.12 billion on average each year.

Health Data Exchange

Source: Thinkstock

By Kate Monica

- A new study by researchers at the University of Notre Dame found health information exchanges (HIEs) could save Medicare billions, reducing healthcare spending by more than $3 billion a year.

The study by Idris Adjerid, Julia Adler-Milstein, PhD, and Corey Angst showed significant cost savings in healthcare markets with established, operational HIEs averaging savings of $139 per Medicare beneficiary a year—a 1.4 percent decrease in spending per individual.

“This equals a $3.12 billion annual reduction in spending if HIEs were to be implemented nationally in 2015,” said Adjerid.

Researchers used data from the seven year period between 2003 and 2009 to compare average Medicare spending per beneficiary in healthcare markets using HIEs compared to markets without an operational HIE. Researchers also adjusted average Medicare spending for regional variations in age, race, and gender.

This data was then analyzed using economic models capable of accounting for factors including healthcare delivery infrastructure, regional hospital quality, health IT adoption, patient demographics, and other economic factors.

Ultimately, researchers concluded Medicare cost savings from HIE use will be at its peak when incentives for payers and providers are aligned and HIE capabilities become more mature.

"Not all health care markets see the same amount of reduced spending from HIEs," he says. "We find that spending reductions are greater in health care markets where providers have financial incentives to use an HIE in ways that reduce spending. We also find that more mature HIEs -- those that have been around longer -- are more effective at reducing costs."

The push to implement EHR technology from federal organizations such as ONC and CMS has been blamed for contributing to increased rates of physician burnout. This new research confirming the meaningful effects of health data exchange enabled through HIEs could substantiate legislative efforts to encourage EHR use, health IT adoption, and information exchange.

"We realize the HIE model is not static -- new vendor-driven models are emerging as market dynamics change,” said Angst. “What we show is that the ability to electronically exchange medical data can result in savings in the overall health system, which should encourage new models of exchange.”

Evidence of the potential effectiveness of HIE use could also spur efforts by policymakers to ensure provider incentive payments are more closely aligned with clinical improvements.

"Our results focusing on the interplay between HIE value and financial incentives in health care are highly relevant to an active debate on how to best design payment models to incentivize high-quality and cost-effective care," stated Adjerid.

"This research is also important because it highlights the conditions under which HIEs can have the largest impact,” he continued. “Policymakers and health care entities need to ensure that financial incentives align with the goals of HIEs and give them sufficient time to mature before expecting promised value."

Recently, healthcare leaders Beth Israel Deaconess CIO John Halamka, MD and Massachusetts eHealth Collaborative CEO Mickey Tripathi, PhD debated the effectiveness of the HITECH Act of 2009 and its forceful legislation surrounding health IT adoption and EHR use. The duo claimed the prescriptive nature of federal requirements have overwhelmed providers and deterred efficiency.

Halamka and Tripathi suggested policymakers give health IT developers, providers, and other industry stakeholders more autonomy over health IT use and innovation in the post-HITECH era. While health data exchange is necessary to coordinating care, EHR usability improvements are paramount to ensuring providers don’t lose the joy of medicine due to new technologies.

“If the post-HITECH era can return control of the agenda to customers, developers, and multistakeholder collaborations, we should be able to recapture the hearts and minds of our clinicians,” they said. 

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