Health Affairs, 24, no. 5 (2005): 1147-1149 doi: 10.1377/hlthaff.24.5.1147 © 2005 by Project HOPE	New Online   Senate Health Reform Bill   Rewarding Providers   Public Option Policy Brief   Health Reform & Abortion   Delivery System Reform

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Economics Of Health Information Technology

PERSPECTIVE

Using Quality Incentives To Drive Physician Adoption Of Health Information Technology

Abstract

 
Medicare policies could have an important impact on physicians’ decisions to use clinical information technology (IT) to better manage patient care. Sheera Rosenfeld and colleagues conclude that Medicare should pay physicians for the costs of adopting IT and assume that future savings to Medicare will justify the investment. The Medicare Payment Advisory Commission (MedPAC) recommended establishing a budget-neutral pay-for-performance program to reward physicians for the outcomes of use, instead of simply helping them purchase a system. This commentary explains why the commission’s policy may be more effective.

However, policymakers must understand the barriers to adoption when they act to accelerate physician adoption. In their paper in this issue of Health Affairs, Sheera Rosenfeld and colleagues provide a limited discussion of the barriers to physicians’ adoption of IT.² This leads them to conclusions regarding government action that might not result in more or effective adoption and could lead to the worst of all worlds: failed adoption.

Barriers to adoption.

Top Barriers to adoption. Federal response. MedPAC recommendations. NOTES

 
MedPAC has found that physicians hesitate to purchase and use clinical IT for many reasons.³ The costs are significant, the complexity of implementing the IT is high, and the financial returns are uncertain. Physicians can benefit through reduced transcription costs and increased revenue as a result of better care documentation. However, successful implementation requires major changes in work flow and, at least during implementation, takes time away from patient care to learn the system. In a fee-for-service payment system, fewer patients means less revenue for physicians. The complexity and implementation costs are further exacerbated by the impression that vendors’ products do not necessarily perform as anticipated. On a recent survey by the Healthcare Information and Management Systems Society (HIMSS), the second-most-important reason given for not investing in IT was "vendors’ inability to effectively deliver products."⁴

These internal factors are compounded by a market that does not reward quality improvement—one of the primary reasons for investing in the technology. Further, the cost savings from better quality often accrue to the insurer, not the physician practice.⁵ For example, if better preventive care leads to fewer hospitalizations, it is the payer that reaps the benefits.

Federal response.

Top Barriers to adoption. Federal response. MedPAC recommendations. NOTES

 
Although Rosenfeld and colleagues discuss government action to decrease the uncertainty of physician investment, such as efforts to standardize products, and the option of requiring physician adoption, their primary conclusion is that the government should provide physicians with the dollars to purchase systems and count on the savings to keep the policy budget-neutral. Even if public dollars were available, it is unclear whether the commitment to short- and long-term organizational change exists. If not, the purchase of an IT system could be a wasted effort, potentially harming the country’s ability to reach full adoption. The worst scenario would be for physicians to make the effort and fail, thus making it less likely that they would attempt such an effort again. In the process, significant public dollars would be wasted.

MedPAC does believe that Medicare should encourage accelerated physician adoption of IT. However, we came to a different conclusion about the most effective policy tool. We agree that physicians need incentives to counteract the various barriers to adoption. Although cost savings may result from physicians’ adoption of IT, we are hesitant to base our policy on assumptions that those savings would be realized, given the sizable barriers to effective implementation and use. We believe that these incentives for IT adoption should be funded without further increases in Medicare expenditures.

MedPAC recommendations.

Top Barriers to adoption. Federal response. MedPAC recommendations. NOTES

 
The incentives MedPAC recommends—differential payments based on quality performance—focus on the objective of improved quality, not simply the purchase of an IT system. Medicare should reward physicians who perform quality-increasing activities associated with IT use. Additional quality payments could help shift the return-on-investment (ROI) calculations that practices must make when deciding whether to invest in IT.

In addition to improving the ROI, focusing on the objective provides guidance to physicians and vendors about how the IT systems should be designed and used and ensures that Medicare achieves the desired policy intent. It would not be enough for a physician practice to purchase a system; the practice needs to show that the system is used for the benefit of the Medicare beneficiary. The policy would be budget-neutral because the rewards would be funded by redistributing a small portion of current physician payment.

For example, we recommend that Medicare reward physicians who track and provide follow-up care, including appropriate reminders, to patients with chronic conditions, or specialists who identify and track patients receiving devices that might need to be monitored. The physician practice need not purchase IT to perform these functions, but it would be much easier if they did so. Further, this strategy will not require physicians to purchase fully operational electronic health records (EHRs). Various forms of IT could be used. The National Committee for Quality Assurance (NCQA) has found, for example, that physicians’ offices are able to use a patient management system to track some of their patients with chronic conditions. Thus, instead of the government agreeing to pay for a given IT package, the government would pay for results, giving physicians and the IT industry the opportunity to develop multiple paths for achieving them. This flexibility makes it more likely that all types of physician practices—large groups and small offices—will adopt IT and participate in the pay-for-performance program. This approach also provides vendors guidance on the types of applications physician offices need, thus encouraging them to build these quality improvement functions into IT systems.

Another MedPAC recommendation could also encourage further use of IT by allowing physicians to benefit financially from quality improvements or cost reductions achieved by the hospitals where they practice. This is often referred to as gain sharing.⁶ As interpreted by the U.S. Department of Health and Human Services (HHS) Office of Inspector General, the Social Security Act severely limits this activity. One of the primary difficulties hospitals face when implementing IT is getting physicians to use the systems. If Medicare allowed hospitals to share gains achieved through use of IT, such as savings from lower medication errors, physicians would be rewarded for their efforts in producing better results for patients, not for simply using IT.

Medicare is a large and important payer for physicians. Health IT is one of the more important system changes necessary to improve quality. The program should act to accelerate physicians’ adoption of IT. These actions must be based on full knowledge of the barriers to adoption, and always focus on the goal of the tool, not the tool itself.

Editor's Notes

 
Glenn Hackbarth is chairman of the Medicare Payment Advisory Commission (MedPAC) in Washington, D.C. Karen Milgate (kmilgate{at}medpac.gov) is a principal policy analyst there.

NOTES

Top Barriers to adoption. Federal response. MedPAC recommendations. NOTES

 

1. R.M. Crane and B. Raymond, "Fulfilling the Potential of Clinical Information Systems," Permanente Journal 7, no. 1 (2003): 62–67; and D.W. Bates and A.A. Gawande, "Improving Safety with Information Technology," New EnglandJournal of Medicine 348, no. 25 (2003): 2526–2534.
2. S. Rosenfeld, C. Bernasek, and D. Mendelson, "Medicare’s Next Voyage: Getting Physicians to Adopt Health Information Technology," Health Affairs 24, no. 5 (2005): 1138–1146.[Abstract/Free Full Text]
3. Medicare Payment Advisory Commission, Report to the Congress: New Approaches in Medicare (Washington: MedPAC, 2004).
4. Healthcare Information and Management Systems Society, "Sixteenth Annual HIMSS Leadership Survey," 14 February 2005, www.himss.org/2005survey/docs/Healthcare_CIO_key_trends.pdf (1 August 2005).
5. Center for Information Technology Leadership, "New Findings Show That Investment in Standardized Healthcare Information Exchange Would Deliver $87 Billion in Annual Healthcare Savings," Press Release (Boston: CITL, 23 February 2004).
6. MedPAC, Report to the Congress: Physician-Owned Specialty Hospitals (Washington: MedPAC, 2005).

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