[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]

                         FOURTH IN A SERIES ON



                               before the

                         SUBCOMMITTEE ON HEALTH

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION


                             APRIL 6, 2006


                           Serial No. 109-68


         Printed for the use of the Committee on Ways and Means

30-444                      WASHINGTON : 2007
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                      COMMITTEE ON WAYS AND MEANS

                   BILL THOMAS, California, Chairman

E. CLAY SHAW, JR., Florida           CHARLES B. RANGEL, New York
NANCY L. JOHNSON, Connecticut        FORTNEY PETE STARK, California
WALLY HERGER, California             SANDER M. LEVIN, Michigan
JIM MCCRERY, Louisiana               BENJAMIN L. CARDIN, Maryland
DAVE CAMP, Michigan                  JIM MCDERMOTT, Washington
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. MCNULTY, New York
PHIL ENGLISH, Pennsylvania           WILLIAM J. JEFFERSON, Louisiana
J.D. HAYWORTH, Arizona               JOHN S. TANNER, Tennessee
JERRY WELLER, Illinois               XAVIER BECERRA, California
KENNY C. HULSHOF, Missouri           LLOYD DOGGETT, Texas
RON LEWIS, Kentucky                  EARL POMEROY, North Dakota
MARK FOLEY, Florida                  STEPHANIE TUBBS JONES, Ohio
KEVIN BRADY, Texas                   MIKE THOMPSON, California
THOMAS M. REYNOLDS, New York         JOHN B. LARSON, Connecticut
PAUL RYAN, Wisconsin                 RAHM EMANUEL, Illinois
MELISSA A. HART, Pennsylvania
DEVIN NUNES, California

                    Allison H. Giles, Chief of Staff

                  Janice Mays, Minority Chief Counsel


                         SUBCOMMITTEE ON HEALTH

                NANCY L. JOHNSON, Connecticut, Chairman

JIM MCCRERY, Louisiana               FORTNEY PETE STARK, California
SAM JOHNSON, Texas                   JOHN LEWIS, Georgia
DAVE CAMP, Michigan                  LLOYD DOGGETT, Texas
JIM RAMSTAD, Minnesota               MIKE THOMPSON, California
PHIL ENGLISH, Pennsylvania           RAHM EMANUEL, Illinois
J.D. HAYWORTH, Arizona

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
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                            C O N T E N T S



Advisory of March 30, 2006, announcing the hearing...............     2


U.S. Department of Health and Human Services, David Brailer, 
  Technology Coordinator.........................................     8
U.S. Department of Health and Human Services, Lewis Morris, Chief 
  Counsel to the Inspector General...............................    16
Cohn, Simon P., National Committee on Vital and Health Statistics    21


Henry, Brent, Partners HealthCare System.........................    41
Kizer, Kenneth W., Medsphere Systems Corporation.................    46
Smith, Joseph, Arkansas Blue Cross Blue Shield...................    51
Bryant, Gloryanne, Catholic Healthcare West......................    61

                       SUBMISSIONS FOR THE RECORD

American Clinical Laboratory Association, statement..............    79
American College of Physicians, statement........................    81
American Health Quality Association, David Schulke, statement....    87
Community Clinics Initiative, San Francisco, CA, statement.......    91
FasterCures, Greg Simon, statement...............................    93
Galvanon, Raj Toleti, Maitland, FL, statement....................    95
Greenway Medical Technologies, Carrollton, GA, statement.........    98
Healthcare Information and Management Systems Society, Mary 
  Griskewicz, Alexandria, VA, statement..........................   100
The Honorable Deborah Pryce, a Representative in Congress from 
  the State of Ohio, letter......................................   101
The Honorable Phil Gingrey, a Representative in Congress from the 
  State of Georgia, statement....................................   102



                        THURSDAY, APRIL 6, 2006

             U.S. House of Representatives,
                       Committee on Ways and Means,
                                    Subcommittee on Health,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2:16 p.m., in 
room 1100, Longworth House Office Building, Hon. Nancy Johnson 
(Chairman of the Subcommittee) presiding.ab
    [The advisory announcing the hearing follows:]


                         SUBCOMMITTEE ON HEALTH

                                                CONTACT: (202) 225-3943
March 30, 2006
No. HL-14

                 Johnson Announces Fourth in Series on

                   Health Care Information Technology

    Congresswoman Nancy L. Johnson (R-CT), Chairman, Subcommittee on 
Health of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on health information technology (IT). 
The hearing will take place on Thursday, April 6, 2006, in the main 
Committee hearing room, 1100 Longworth House Office Building, beginning 
at 2:00 p.m.
    In view of the limited time available to hear witnesses, oral 
testimony at this hearing will be from invited witnesses only. 
Witnesses will include representatives from the public and private 
sectors to discuss processes currently in place to develop and adopt IT 
standards, how systems are currently being used in the private sector, 
and what additional actions are required to expand adoption over the 
next few years. However, any individual or organization not scheduled 
for an oral appearance may submit a written statement for consideration 
by the Committee and for inclusion in the printed record of the 


    Greater use of IT in the health care field has the potential to 
reduce medical errors, improve patient care, and reduce costs; yet 
adoption of new technology has been slow. President Bush has stated a 
goal of providing most Americans with electronic health records by 
2014. To further this goal, Secretary of Health and Human Services 
Michael Leavitt is chairing the American Health Information Community 
(AHIC), comprised of 17 members from the public and private sectors, to 
develop IT standards and achieve health IT interoperability. The AHIC 
will be developing recommendations by the end of 2006 in four areas: 
consumer empowerment, chronic care, biosurveillance, and electronic 
health records.
    While this public-private partnership represents an important step 
in furthering adoption of health IT, additional actions are needed by 
both the public and private sectors to achieve the President's goal. 
Congress can learn from the experience of public and private entities 
that are implementing health IT systems as to what additional actions 
are required to realize the ultimate goal of a secure, nationwide 
health care information infrastructure that ensures that necessary 
information is available to health care providers when they need it in 
order to provide the best patient care.
    This hearing is the fourth in a series that the Subcommittee is 
holding on health IT, covering private sector initiatives, government 
programs, and electronic prescribing. This hearing will focus on recent 
developments in this area, legislation that has been introduced to 
address these issues, and ways in which Congress can act to ensure 
continued progress.
    In announcing the hearing, Chairman Johnson stated, ``I have long 
been a champion of increasing the use of health IT, and I applaud the 
steps being taken by Secretary Leavitt to foster a public-private 
dialogue to accelerate progress in this area. Congress must learn from 
the successful health IT programs already in place in the private 
sector to determine how we can best assist in expanding the use of 
health IT to all providers, thus providing benefits of this technology 
to people across the country.''


    The hearing will focus on the progress currently being made through 
public and private efforts to increase adoption of health IT, and areas 
where specific legislative changes may be required to further these 


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    Chairman JOHNSON. Good afternoon, everyone. Welcome to this 
hearing on health information technology (IT).
    I am pleased today to chair the fourth in a series of 
hearings this Subcommittee has held on the subject of IT in the 
health care sector. Greater use of IT has the potential to 
dramatically improve the safety and quality of health care for 
Americans while at the same time lowering costs through 
reductions in clinical errors, elimination of redundant 
procedures, improved systems capability to deliver preventive 
care and chronic disease care, and by significantly reducing 
duplicative administrative procedures.
    Yet, despite these benefits, widespread adoption of IT in 
the field of health and out in the small towns in doctors' 
offices has been disappointingly slow. I have long supported 
efforts to increase the use of IT in health care. In 2003, I 
introduced H.R. 2915, the National Health Information 
Infrastructure Act. This bill was used as a basis for the 
Executive order that created the Office of the National 
Coordinator (ONC) for Health IT, but it is time to legislate. 
So, last fall I introduced, along with Energy and Commerce 
Subcommittee on Health Chairman Deal a follow-up piece of 
legislation, H.R. 4157, the Health IT Promotion Act. This bill 
takes a straightforward approach to addressing this issue by 
focusing exclusively on those areas in which Congress needs to 
intervene in order to ensure the development of an 
interoperable health information system that will serve us in 
the future--a future in which health care protocols and 
pharmaceuticals will be based on a far richer and more timely 
integration of our national experience with care outcomes, 
pharmaceutical interactions, and new developments in genetics 
and medicine.
    First, my bill codifies the ONC. This position was created 
by Executive order, and both President Bush and Secretary 
Leavitt have demonstrated extraordinary leadership in helping 
people understand the value of health IT to improving care 
quality and their commitment to building a national 
interoperable health IT architecture.
    However, I think it is important that the ONC be codified 
in statute and a solid foundation built for the oversight and 
continued development of this infrastructure in the decades 
ahead. My bill also looks at what I believe are the key issues 
that Congress must address if health IT is going to be 
advanced. Current privacy and security laws at both the State 
and Federal levels were passed in a paper-based era without 
taking into account the needs of an electronic world. I believe 
these laws need to be reviewed, and issues that need rethinking 
must be crystallized. My bill sets out a process for doing so. 
I recognize that this is a controversial area, but I firmly 
believe that it is a topic that cannot be ignored. In the end, 
health IT gives us the ability to improve the protection of 
patient information while also ensuring that electronic systems 
function effectively. Based on productive meetings in recent 
weeks, I believe the potential of this section of the bill can 
be realized.
    This bill also seeks to open up private sector sources of 
funds to speed adoption of health IT by allowing various 
providers and payors who will benefit most rapidly to provide 
physicians and other providers with the technology and support 
services to speed the dissemination of health IT. Recognizing 
concerns that some have expressed that a statutory exception to 
the Stark and anti-kickback laws could lead to captive referral 
relationships between donating entities and physicians, the 
bill sets specific limits on the type of technology that can be 
donated and requires a review of the impact of these exceptions 
after 3 years.
    From many meetings regarding the challenge of 
dissemination, I have concluded that a statutory rather than a 
regulatory exception is necessary so that all parties are clear 
on what is permissible. I do not believe that the regulatory 
exception proposed by the Administration is workable, as it is 
by its nature a one-by-one process to reach a nationwide goal 
involving literally millions of providers of all types and 
    I strongly support congressional action in this area and 
urge my colleagues to question closely the witnesses we have 
gathered today on this topic and suggest any follow-up meetings 
necessary to provide them with a thorough understanding of the 
challenge we face in disseminating health IT.
    My bill also recognizes that we cannot build a 21st century 
health information infrastructure on top of an outdated coding 
system. As we seek to improve quality reporting and develop 
pay-for-performance initiatives, and as we grapple with global 
health issues like avian flu, we must use the updated coding 
system known as ICD-10 that reflects modern medicine and that 
has been in use for years throughout the rest of the world.
    I am very encouraged by the steps that the Administration 
has taken to engage in a public-private partnership to move the 
health IT agenda forward. With the establishment of the 
American Health Information Community (AHIC), I believe that we 
will see real progress in the months ahead. My bill requires 
AHIC to report back to Congress on its progress and further 
requires the Secretary to develop a strategic plan and 
recommendations as to a permanent governance structure that can 
oversee a public-private collaborative process involving all 
the entities to ensure the continuous improvement of the 
national health information infrastructure.
    Today I welcome leaders who will help us understand the 
truly remarkable progress that has been made to date and the 
additional ways in which Congress can advance the health IT 
    First I am happy to welcome Dr. David Brailer, who was 
named the National Health Information Technology Coordinator 
through the President's 2004 Executive order. Shortly after his 
appointment, Dr. Brailer produced a framework for strategic 
action to guide the Federal Government's efforts in this area, 
and he has been leading the Administration's efforts to set 
standards and develop a certification process to increase 
adoption of health IT in both the public and private sectors. 
He has also stimulated a remarkably broad, thoughtful dialog 
among technical experts and seasoned providers to help us as a 
nation understand the dimensions of the challenge we face. A 
national, interoperable, secure, and robust electronic health 
information system will truly revolutionize patient access to 
quality care and deepen and enrich the patient-physician 
relationship. It is a challenge we must not fail to meet, and I 
congratulate Dr. Brailer on the leadership he has provided. I 
look forward to hearing in more detail of his work and the work 
that is being done by AHIC and what specific results we can 
expect to see in the coming months.
    We will also hear from Lewis Morris, Chief Counsel with the 
Office of the Inspector General (OIG) at the Department of 
Health and Human Services (HHS). He will discuss the OIG's 
proposed exception to the anti-kickback statute for health IT.
    We will conclude our first panel with Dr. Simon Cohn, Chair 
of the National Committee on Vital and Health Statistics 
(NCVHS), which is an advisory body to HHS on health IT matters. 
The panel recommended moving to the ICD-10 coding system back 
in 2003, and he will discuss how the panel arrived at that 
recommendation. I also believe Dr. Cohn has an important 
perspective to share on what NCVHS has learned over the years 
in its advisory capacity, and I look forward to his testimony.
    On our second panel, I am pleased to welcome a 
distinguished group who are currently engaged in implementing 
health IT. First we will hear from Brent Henry, general counsel 
for Partners HealthCare System in Massachusetts. Mr. Henry will 
discuss the work that Partners has done in implementing health 
IT and the additional steps it hopes to take in the future. You 
will also discuss the role of health IT in furthering pay-for-
performance initiatives.
    Dr. Ken Kizer, former president of the National Quality 
Forum, will discuss with us the work he is doing to promote the 
use of electronic health records through his company, 
Medsphere, along with his ideas as to how to further the 
adoption of technology in the health care arena.
    We will then hear from Joe Smith with Blue Cross Blue 
Shield of Arkansas, who will discuss the progress his 
organization has made to date in implementing health IT and 
what he sees as the key steps forward.
    Finally, Gloryanne Bryant of Catholic Healthcare West will 
discuss her experiences with the new ICD-10 coding system, the 
importance of such a system for quality reporting purposes, and 
the implementation plans for conversion that her organization 
already has made.
    I look forward to hearing from all of our witnesses, and 
thank you for being here with us today, and I would like to 
yield to my colleague, Mr. Stark.
    Mr. STARK. Thank you, Madam Chair. It is good to continue 
our ongoing discussion about IT in the medical care field.
    We must acknowledge that we have been talking about the 
need for a national IT system for well over a decade, and no 
progress has been made. I recently found a bill I wrote the 
year you graduated from Radcliffe, 1992, that required Federal 
programs to use a common, interoperable system for billing and 
patient records. Unfortunately, that bill did not pass, and the 
absence of leadership by our Federal Government since that time 
has given us just a hodgepodge of proprietary silos that we can 
only describe as a mess.
    I still don't see the Federal Government taking any 
leadership. We are repeating our past mistakes, giving far too 
much room to private IT corporations to continue their age-old 
fights over what standards we should be using. Those people 
have been talking around each other for years. As a matter of 
fact, if you could have believed when they started this that 
Apple Computer would put Windows on a Mac, then they got to 
that long before we have ever agreed to what kind of an IT 
system we should have for health care.
    In the meantime, the rest of us, patients and providers, 
have to wait to realize the potential that we all agree that a 
nationwide interoperable IT system would bring to us. This has 
got to stop. We need a timeline for action. We need a date 
certain that will get the Federal bureaucrats off their butts, 
and we just cannot wait for a bunch of people to agree who is 
going to take the lead and make all the money in this.
    I am still confused as to why we are not leveraging the 
Veterans Affairs' (VA) system. It is highly sophisticated. It 
supports one of the highest-quality systems in the world. The 
people keep telling me the government cannot do anything right, 
but we already have. I have heard some talk about that some of 
the system is based on old code, but that is easy to correct, 
and that is not a government job. That is something that--we 
could get that done in India for a low cost. So, let's see if 
we cannot find creative solutions, and usually we have, instead 
of trying to reinvent the wheel.
    I want to thank Dr. Kizer for being here today to shed some 
light on how the commercial use of this could work in a market 
environment. I am pleased that Dr. Cohn is here to discuss 
NCVHS and what they have done to develop a standard electronic 
health record. Why we have to think about re-creating the work 
that has been done, I don't know, and it is time, it seems to 
me, to just say if you want to be in the Medicare Program, you 
start using the electronic health records that he has 
developed. We will change them as time goes on, but I do not 
see any sense that we just have to sit and fiddle around 
looking to reinvent that again.
    The promise of a national health information infrastructure 
is coming closer to fruition, but whatever solution we get to, 
we have to agree now is not going to work. We are going to be 
back here having oversight, to change, to accommodate people 
who find they cannot use it easily. I am just suggesting let's 
get started. I don't think there is any partisan differences in 
that, but I do think we just have to drop the gavel and say 
enough is enough.
    Strengthening our Nation's confidentiality and security 
remains one of my top concerns, the issue of privacy, and I 
hope you and I can reach agreement on that. On the Medicare 
fraud provisions, I would caution the Chair and Centers for 
Medicare and Medicaid Services (CMS) to go carefully down that 
path. Every time we change those laws, we thicken the 
regulation book, and then a bunch of sharp lawyers find 800 
ways to get around it, and then we write it again. My thought 
is that it is difficult for me to understand, with the 
hospitals in here last month complaining they are all going 
broke and do not have enough money, now suddenly the hospitals 
are telling us they want to spend a lot of money to buy 
expensive IT equipment. I don't know where they are going to 
get that money, but I don't think we are getting the same story 
from the hospitals on the same side of the issue. My feeling 
would be that I certainly would be willing to figure out a way 
that, in the end, if it is important to the Nation and 
everybody benefits, we just better figure out to start out in 
Medicare, let's pay--let's raise the payment per procedure and 
say it has got to be done this way, and then they can go and 
buy whatever equipment they want with the extra money we give 
them, because I don't think there is going to be any IT fairy 
that is going to put that money under our pillow or the 
hospital pillow. I think it is so important, I agree with you, 
Madam Chair, but I think we better be realistic and say it is 
going to cost us something. I think it would be well worth it.
    I cannot close without asking you if you have got a date 
set for our Part D hearings, but----
    Chairman JOHNSON. The first week we get back.
    Mr. STARK. Really?
    Chairman JOHNSON. The first week we get back.
    Mr. STARK. Okay. I will be back on time. Hooray. Thank you. 
With that wonderful news, I look forward to today's discussion.
    Chairman JOHNSON. Dr. Brailer?


    Dr. BRAILER. Thank you, Chairwoman Johnson, Mr. Stark, 
Members of the Subcommittee. I have submitted my written 
testimony, and I will just, with your consent, give some brief 
overview and then remarks supporting that.
    I met with you in July of 2005, and at that time I laid out 
a lot of philosophy, the foundations, economic, clinical, 
technical reasons why we are doing what we are doing. We talked 
a lot about what we intended to do, how we would go forward.
    I am happy to tell you now that I am meeting with you that 
we are fully underway and we have substantial progress to 
report. We have actions being taken that I will summarize in 
three areas of work: first, in our long-term infrastructure, 
the capacity to have a real coherent set of activities in the 
United States that makes our health information useful and 
protected; secondly, our short-term actions, to bring us all to 
very short-term relevance, to recognize the needs of the 
American population to have relief from medical errors and 
other issues that they face when they consume health care; and, 
thirdly, actions that are underway to constitute the market 
drivers, set the foundation for ensuring that these ideas don't 
just become academic ideas, but become ideas that are underway 
in doctors' offices and hospitals and consumers' lives and 
throughout the United States. I will review each one of these.
    In our long-term infrastructure, our key effort has been 
focused on ensuring that the United States has a coherent set 
of information standards. We are well underway with this. We 
formed 6 months ago a new group called the Health IT Standards 
Panel, formed under American National Standards Institute 
(ANSI), which is one of the Nation's leading standards bodies. 
This group has brought together the standards organizations in 
the United States but, more importantly, shifted the control 
over this process from technical companies and vendors, to 
doctors, hospitals, and consumers who are focused on their end-
stage needs for using information in their business process. We 
have shifted this effort from looking at technical issues to 
look at business problems, clinical problems in health care. 
How does a standard help a patient going to an emergency room? 
How does it help a doctor communicate with another one about a 
complicated patient?
    We have given use cases, business situations, clinical 
problems, to this standards group to work on. This happened in 
March of 2006, and by May of 2006, this group has to propose 
standards to meet those use cases. By the end of 2006, we 
expect to have detailed, implementation-ready guidelines for 
these use cases. These are three problems out of perhaps 40 or 
50 major issues that we face as patients navigate through 
health care, but the process we are developing through these 
four not only will address some very short-term urgent ones, 
but give us a process going forward over the next 2 years to 
have a set of standards that are coherent, modern, innovative, 
and meet the needs of doctors and hospitals.
    Our second effort is to make sure that we strengthen and 
improve security and privacy. We are well underway with this as 
well. We have formed a new entity that is called the Health 
Information Security and Privacy Collaboration. This is a 
Federal-State partnership that brings together 43 States who 
submitted proposals to us that we are about to award. Twenty-
six of these are to State agencies that are going to be the 
lead agency in the States' effort to evaluate their privacy and 
security roles; 17 are private sector designees, regional 
health information organizations, or others that have been 
designated by that State to act on their behalf. We will have 
these under contract by the end of April, and each of these 
will be obligated to do two things: to evaluate their State-
level security and privacy rules to ensure that they are ready 
for the digital era of medicine; secondly, to bring all of 
these together to get national consensus on what it is that we 
have to do to make sure that we are prepared to have policies 
that are as progressive as our technology investments.
    I ask you to follow these because we have given them a 
broad range of output that their consensus recommendations 
could constitute administrative actions, statutory actions, or 
any other actions that they believe are necessary for States or 
the Federal Government to take to ensure that health 
information is protected at each step along the way.
    We are pushing very hard on health information exchange. We 
have awarded contracts totaling $18.6 million to consortia of 
technology companies working with doctors and hospitals in 
local markets. There are 12 local markets, and each of them are 
innovating a local architecture, a local solution for sharing 
information, but we are bringing these together to make sure 
that the United States has one set of standards for a networked 
solution for health information sharing, and in June of 2006, 
just 2 months away, we expect these groups to propose their 
architectures to us and to begin a public dialog so that we can 
understand what it takes in the United States to build out the 
architecture to ensure that information is portable. When a 
patient goes to the emergency room, if they want it to, their 
information is there, and, if they don't want it to, it is not. 
When they get referred between doctors, move, when they are 
evacuated from a site of a disaster or some other events, we 
want their information to be portable but secure along the way.
    Finally, we are far along in our efforts to develop 
certification requirements and standards for electronic health 
records. The final criteria for ambulatory electronic health 
records were published in February of 2006 through a consensus 
process and the Certification Commission for Health IT. In 
April, which is the month we are in, we are accepting 
applications for certification among vendors. We expect by June 
to have published certification results for which vendors meet 
the public criteria. This certification process is critical for 
us to have the ability to bring along all the 300 companies, 
with billions of dollars of investment into the modern 
infrastructure that we are anticipating so we can have the 
synergy of all of these efforts. We are then going to follow 
along immediately this year with inpatient health record 
certification, personal health record, and architecture 
certification. Our goal over the next 5 years is to have all of 
the key elements of health IT certified using consensus-driven, 
public domain, multi-stakeholder criteria.
    While we are developing these long-term infrastructures, we 
have a number of short-term actions underway, and these short-
term actions are aimed to make sure that we are just not 
thinking great thoughts about the future, but that we are 
holding ourselves accountable to move directly and linearly 
toward impacts that can support the American public. We 
launched the AHIC with its first meeting on October 7th. This 
group is 17 members, which are eight members from the private 
sector, including leaders of large technology companies, 
doctors, hospitals, consumer advocates, privacy advocates, and 
leaders of the key Federal agencies--CMS, Office of Personnel 
Management, the Military Health System, VA--to come together 
under Secretary Leavitt's leadership to make consensus 
recommendations on what the Federal Government needs to do to 
have immediate results and what the private sector needs to do. 
This is the novel aspect of this partnership to ensure that 
both the public sector and the private sector are moving 
forward together.
    We have four breakthroughs identified: biosurveillance, 
where we are focused in getting standardized but anonymized 
data to public health agencies within 24 hours; consumer 
empowerment, where we are focused on having registration and 
demographic information and a medication history being made 
available to patients so they can see what their drugs are and 
make it available to who they choose; secure messages between 
doctors and patients so they can communicate in a new way that 
is much more empowering to the patient and much more of a 
convenience to the physician; and portability of lab 
information so laboratory data can follow patients.
    We expect to see tangible, real results from these actions 
take place in early 2007, and to that end, on May 16th the work 
groups that have been formed in these areas are delivering in 
public their recommendations for specific Federal policy 
actions to be taken to realize those results. Again, these will 
be far-ranging, including administrative actions, potential 
statutory actions, so we ask you to pay attention to this. 
These consensus recommendations are critical in our efforts to 
make sure that we are focused on the here and now in addition 
to the future.
    While we are doing these, we are also looking at the market 
drivers. These are the things that help us achieve the results 
to make sure they are just not conceptualized but delivered. We 
are following a so-called third pathway toward health IT 
adoption. On the one hand, we could take mandates or 
requirements for government to tell the industry what to do. We 
fear that this would blunt innovation and the kind of clinical 
transformation and communications, decisionmaking, 
accountability that is so intrinsically part of medicine.
    We, on the other hand, don't want to take a laissez-faire 
approach and say we hope the market does well, because it is 
very clear there is a market failure here and the government 
has primary responsibility for addressing that. This third 
option is using the government's purchasing power aligned with 
the purchasing power of those in the private sector to ensure 
that we put our efforts behind these innovative and 
transformational opportunities. We are doing this in four 
    First, the physician self-referral exception and the anti-
kickback safe harbor. Our priority here is to take urgent 
action and to make sure that what we do is clear and narrow, 
that we are linking the exceptions and the safe harbors to 
proven technologies that have direct benefit to consumers.
    Secondly is the actions of the Office of Personnel 
Management. This week, the Office of Personnel Management 
published its carrier letter instructing health plans about 
what needs to be done to access Federal Employees Health 
Benefits Programs. This call letter included health IT 
capabilities, and it included how health plans are expanding 
their support for health IT and what the business plans are 
that they are pursuing for accelerating health IT adoption in 
the market areas they serve.
    We are also pushing this through pay for performance in the 
646 and 649 demos that you know so well. Also, we are 
continuing the beta testing of vista office electronic health 
records (EHR). We do see a limited role for this supporting the 
safety net. It has substantial testing underway and efforts to 
make sure that it conforms with Health Insurance Portability 
and Accountability Act (P.L. 104-191) (HIPAA) and with the 
public certification process, but subject to these hurdles, we 
do expect there to be a positive contribution that it can make 
to the Nation's solution.
    As you can see, real progress is underway. We have tangible 
actions we are focused on and near-term results. I appreciate 
your efforts, your support, and your leadership so much, and 
thank you for the chance to update you on our work.
    [The prepared statement of Dr. Brailer follows:]

 Statement of David Brailer, M.D., Ph.D., Technology Coordinator, U.S. 
                Department of Health and Human Services

    Chairwoman Johnson and Members of the Subcommittee, I am Dr. David 
Brailer, the National Coordinator for Health Information Technology. 
The Office of the National Coordinator for Health Information 
Technology is a component of the Department of Health and Human 
Services (HHS). Thank you for inviting me to testify today on health 
information technology activities underway in the Department.
Setting the Context
    On April 27, 2004, the President signed Executive Order 13335 (EO) 
announcing his commitment to the promotion of health information 
technology (IT) to improve efficiency, reduce medical errors, improve 
quality of care, and provide better information for patients and 
physicians. In particular, the President called for widespread adoption 
of electronic health records (EHRs) within 10 years so that health 
information will follow patients throughout their care in a seamless 
and secure manner. Toward that vision, the EO directed the Secretary of 
HHS to establish within the Office of the Secretary the position of 
National Coordinator for Health Information Technology, with 
responsibilities for coordinating Federal health information technology 
(health IT) programs with those of relevant executive branch agencies, 
as well as coordinating with the private sector on their health IT 
efforts. On May 6, 2004, I was appointed to serve in this position.
    On July 21, 2004, during the Department's Health IT Summit, we 
published the ``Strategic Framework: The Decade of Health Information 
Technology: Delivering Consumer-centric and Information-rich Health 
Care,'' (The Framework). The Framework outlined an approach toward 
nationwide implementation of interoperable EHRs and in it we identified 
four major goals. These goals are: 1) inform clinical practice by 
accelerating the use of EHRs, 2) interconnect clinicians so that they 
can exchange health information using advanced and secure electronic 
communication, 3) personalize care with consumer-based health records 
and better information for consumers, and 4) improve public health 
through advanced bio-surveillance methods and streamlined collection of 
data for quality measurement and research.
    Building on the EO, The Framework, and input received from the 
public and private sectors, we have developed the clinical, business, 
and technical foundations for the HHS health IT strategy. Let me turn 
to some of those now.

The Clinical Foundation: Evidence of the Benefits of Health IT
    We believe that health IT can save lives, improve care, and improve 
efficiency in our health system. Five years ago, the Institute of 
Medicine (IOM) estimated that as many as 44,000 to 98,000 deaths occur 
each year as the result of medical errors. Health IT, through 
applications such as computerized provider order entry can help reduce 
medical errors and improve quality. For example, studies have shown 
that adverse drug events have been reduced by as much as 70 to 80% by 
targeted programs, with a significant portion of the improvement 
stemming from the use of health IT.
    Every primary care physician knows what a recent study in the 
Journal of the American Medical Association (JAMA) showed: that 
clinical information is frequently missing at the point of care, and 
that this missing information can be harmful to patients. That study 
also showed that clinical information was less likely to be missing in 
practices that had full electronic records systems. Patients know this 
too and are taking matters into their own hands. A recent survey by the 
Agency for Health Care Research and Quality (AHRQ) with the Kaiser 
Family Foundation and the Harvard School of Public Health found that 
nearly 1 in 3 people say that they or a family member have created 
their own set of medical records to ensure that their health care 
providers have all of their medical information.
    Current analyses examining whether health IT will produce cost 
savings show mixed results. Some researchers estimate that savings from 
the implementation of health IT and corresponding changes in care 
processes could range anywhere from 7.5 to 30 percent of overall health 
care costs. These estimates are based in part on the reduction of 
obvious errors. For example, on average, a medical error is estimated 
to cost about $3,700 in 2003 dollars. But, these savings are not 
guaranteed through the simple acquisition of health IT. If poorly 
designed or implemented, health IT will not bring these benefits, and 
in some cases may even result in new medical errors and potential costs 
(Koppel et al. 2005).
    Therefore, achieving cost savings requires a much more substantial 
transformation of care delivery that goes beyond simple error reduction 
and the use of health IT. Health IT must be combined with real process 
change in order to see meaningful improvements in our delivery system. 
It requires the industry to follow the best diagnostic and treatment 
practices everywhere in the nation. For example, cholesterol screenings 
can lead to early treatment, which in turn can reduce the risk for 
heart disease. Where that has been done, there have been substantial 
savings on cardiac expenditures. Studies also show that while most 
investments in health IT are made by providers, consumers and payers 
are most likely to reap the benefits and efficiencies from these 

Business Foundation: The Health IT Leadership Panel Report
    Recognizing that the healthcare sector lags behind most other 
industries in its investment in IT, HHS employed a contractor, the 
Lewin Group, to convened a Health IT Leadership Panel to help 
understand how IT has transformed other industries and how, based upon 
their experiences, it can transform the health care industry.
    The Leadership Panel was comprised of nine CEOs from leading 
companies that purchase large quantities of healthcare services for 
their employees and dependents and that do not operate in the 
healthcare business. These included CEOs from FedEx Corporation, 
General Motors, International Paper, Johnson Controls, Target 
Corporation, PepsiCo, Procter and Gamble, Wells Fargo, and Wal-Mart 
Stores. The business leaders were called upon to evaluate the need for 
investment in health information technology and the major roles for 
both the government and the private sector in achieving widespread 
adoption and implementation. Based upon their own experiences using IT 
to reengineer their individual businesses--and by extension, their 
industries--the Leadership Panel concluded that investment in 
interoperable health IT is urgent and vital to the broader U.S. economy 
due to rising health care demands and business interests.
    As explained by the Lewin Group, The Leadership Panel unanimously 
agreed that the federal government must begin to drive change before 
the private sector would become fully engaged. Specifically, the 
Leadership Panel concluded:

      Potential benefits of health IT far outweigh manageable 
      Health IT needs a clear, broadly motivating vision and 
practical adoption strategy.
      The federal government should provide leadership, and 
industry will engage and follow. Lessons of adoption and success of IT 
in other industries should inform and enhance adoption of health IT.
      Among its multiple stakeholders, the consumer--including 
individual beneficiaries, patients, family members, and the public at 
large--is key to adoption of health IT and realizing its benefits.
      Stakeholder incentives must be aligned to foster health IT 

    The Leadership Panel identified as a key imperative that the 
Federal government should act as leader, catalyst, and convener of the 
nation's health information technology effort. Private sector 
purchasers and health care organizations can and should collaborate 
alongside the federal government to drive adoption of health IT. In 
addition, The Leadership Panel members recognized that widespread 
health IT adoption may not succeed without buy-in from the public as 
health care consumer. Panelists suggested that the national health IT 
vision must be communicated clearly and directly to enlist consumer 
support for the widespread adoption of health IT.

The Technical Foundation: Public Input Solicited on Nationwide Network
    HHS published a Request for Information (RFI) in November 2004 that 
solicited public input about whether and how a Nationwide Health 
Information Network (NHIN) could be developed. This RFI asked key 
questions to guide our understanding around the organization and 
business framework, legal and regulatory issues, management and 
operational considerations, standards and policies for 
interoperability, and other considerations.
    We received over 500 responses to the RFI. These responses have 
yielded one of the richest and most descriptive collections of thoughts 
on interoperability and health information exchange that has likely 
ever been assembled in the U.S. As such, it has set the foundation for 
actionable steps designed to meet the President's goal.
    Among the many opinions expressed by those supporting the 
development of a NHIN, the following concepts emerged:

      A NHIN should be a decentralized architecture built using 
the Internet, linked by uniform communications and a software framework 
of open standards and policies.
      A NHIN should reflect the interests of all stakeholders. 
A governance entity composed of public and private stakeholders should 
oversee the determination of standards and policies.
      A NHIN should provide sufficient safeguards to protect 
the privacy of personal health information.
      Incentives may be needed to accelerate the deployment and 
adoption of a NHIN.
      Existing technologies, federal leadership, and 
certification of EHRs will be the critical enablers of a NHIN.
      Key challenges to developing and adopting a NHIN 
included: the need for additional and better refined standards; 
addressing privacy concerns; accurately verifying patients' identity; 
and addressing discordant inter- and intra-state laws regarding health 
information exchange.

Key Actions
    Building on these steps, two critical challenges to realizing the 
President's vision for health IT are being addressed: a) 
interoperability and the secure portability of health information, and 
b) electronic health record (EHR) adoption. Interoperability and 
portability of health information using information technology are 
essential to achieving the industry transformation goals sought by the 
President. Further, the gap in EHR adoption between large hospitals and 
small hospitals, between large and small physician practices, and among 
other healthcare providers must be addressed. This adoption gap has the 
potential to shift the market in favor of large players who can afford 
these technologies, and can create differential health treatments and 
quality, resulting in a quality gap.
    To address these challenges, HHS is focusing on several key 
actions: harmonizing health information standards; promoting the 
certification of health IT products to assure consistency with 
standards; addressing variations in privacy and security policies that 
can pose challenges to interoperability; and developing a prototype, 
nationwide, Internet-based architecture for sharing of electronic 
health information. These efforts are inter-related, and a new federal 
advisory committee, the American Health Information Community (the 
Community), will make recommendations regarding the government's role 
in responding to these challenges.

American Health Information Community
    On July 14, 2005, Secretary Leavitt announced the formation of a 
national public-private collaboration, the American Health Information 
Community, a public-private body formed pursuant to the Federal 
Advisory Committee Act. The Community has been formed to facilitate the 
transition to electronic health records in a smooth, market-led way. 
The Community is providing input and recommendations to the Secretary 
on use of common standards and how interoperability among EHRs can be 
achieved while assuring that the privacy and security of those records 
are protected. On September 13, 2005, Secretary Mike Leavitt named the 
Community's 17 members, including nine members from the public sector 
and eight members from the private sector.
    At its November 29, 2005 meeting, the Community formed workgroups 
that will make recommendations for specific achievable near-term 
results in the following areas:

      Biosurveillance--Enable the transfer of standardized and 
anonymized health data from the point of health care delivery to 
authorized public health agencies within 24 hours of its collection.
      Consumer Empowerment--Make available a consumer-directed 
and secure electronic record of health care registration information 
and a medication history for patients.
      Chronic Care--Allow the widespread use of secure 
messaging, as appropriate, as a means of communication between doctors 
and patients about care delivery.
      Electronic Health Records--Create an electronic health 
record that includes laboratory results and interpretations, that is 
standardized, widely available and secure.

    These workgroups will make recommendations at the May 16 meeting of 
the Community.
    In addition to the formation of the Community, HHS has issued 
contracts, the outputs of which will serve as inputs for the 
Community's consideration. Specifically, these contracts focus on the 
following major areas:

Standards Harmonization
    HHS awarded a contract to the American National Standards 
Institute, a non-profit organization that administers and coordinates 
the U.S. voluntary standardization activities, to convene the Health 
Information Technology Standards Panel (HITSP). The HITSP brings 
together U.S. standards development organizations and other 
stakeholders. The HITSP is developing and implementing a harmonization 
process for achieving a widely accepted and useful set of health IT 
standards that will support interoperability among health care software 
applications, particularly EHRs.
    Today, the standards-setting process is fragmented and lacks 
coordination and specificity, resulting in overlapping standards and 
gaps in standards that need to be filled. We envision a process where 
standards are identified and developed around real-world scenarios--
i.e., around use cases or breakthroughs. A ``use case'' is a technology 
term to describe how we can focus standardization efforts on specific 
areas that demonstrate clinical and business value. As of March 2006 we 
have three common use cases for the standards harmonization process and 
which will be used in the other contracts discussed below. In May 2006, 
the HITSP will have proposed "named standards" for the three use cases. 
After the named standards are recommended to the Community, the HITSP 
will begin the development of interoperability specifications for each.

Compliance Certification
    HHS awarded a contract to the Certification Commission for Health 
Information Technology (CCHIT) to develop criteria and evaluation 
processes for certifying EHRs and the infrastructure or network 
components through which they interoperate. CCHIT is a private, non-
profit organization established to develop an efficient, credible, and 
sustainable mechanism for certifying health care information technology 
products. The contract, currently scheduled for a three-year period, 
will address three areas of certification: ambulatory electronic health 
records, inpatient electronic health records, and the infrastructure 
components through which they could interoperate.
    The CCHIT has made significant progress toward the certification of 
ambulatory electronic health records. In February 2006, CCHIT began 
using its final criteria to conduct ambulatory electronic health record 
certification pilot tests and will be accepting applications for 
operational certification in April 2006 [note that we are now in April 
2006, so this might need some clarification], with the goal of having 
certified electronic health record products in the marketplace as early 
as June 2006. Certification will help buyers of HIT determine whether 
products meet minimum requirements, which include functionality and 

NHIN Architecture
    HHS has awarded contracts totaling $18.6 million to four consortia 
of health care and health information technology organizations to 
develop prototype architectures for the Nationwide Health Information 
Network (NHIN). The four consortia will move the nation toward the 
President's goal of personal electronic health records by creating 
uniform architecture for health care information. The NHIN architecture 
will be coordinated with the work of the Federal Health Architecture 
and other interrelated infrastructure projects. The goal is to develop 
real solutions for nationwide health information exchange by 
stimulating the market through a collaborative process and the 
development of network functions. In June 2006, the contractors will 
submit proposed architecture requirements for the NHIN's to HHS and a 
public meeting will be held to review them.

Security and privacy
    HHS awarded a contract to RTI International in association with the 
National Governors Association Center for Best Practices. Through this 
contract, stakeholders, including consumers, within and across up to 40 
states will assess variations in organization-level business policies 
and State laws that affect health information exchange; identify and 
propose practical solutions for addressing such variation that will 
comply with privacy and security requirements in applicable Federal and 
State laws; and develop detailed plans to implement identified 
    All State and territory governors have been invited to submit a 
proposal for participation. Proposals for participation were due March 
1, 2006, and are presently being reviewed. States and territories that 
receive an award will be required to undertake certain activities that 
include: examining privacy and security policies and business practices 
regarding electronic health information exchange; convening and working 
closely with a wide range of stakeholders in the State, including 
consumers, to identify best practices, barriers and solutions; and 
developing an implementation plan for solutions to address 
organization-level business practices and State laws that affect 
privacy and security practices for interoperable health information 
    In the next six months, state consortia will produce an interim 
assessment of current privacy and security variations. To do this, 
state subcontractors will form collaborative workgroups to define this 
preliminary landscape. State solutions and implementation plans under 
this contract will be finalized in early 2007.

EHR Adoption Study
    To assess progress toward the President's goal for EHR adoption, we 
must be able to measure the rate of adoption across relevant care 
settings. To date, several health care surveys have queried health care 
providers such as individual physicians, physician group practices, 
community health centers, and hospitals on their use of EHRs in an 
effort to estimate an overall ``EHR adoption rate.'' These surveys 
indicate an adoption gap; however, the surveys and what they have 
measured have varied. These variations occur from survey factors such 
as the type of entity, geography, provider size, type of health 
information technology deployed, how an EHR is defined, the survey 
sampling frame methodology (e.g., the source list of physicians), and 
survey data collection method (i.e., phone interview, mail 
questionnaire, internet questionnaire, etc.).
    Due to the variations in the purpose and approach, these surveys 
have yielded varying methods of EHR adoption measurement. In 
particular, no single approach yields a reliable and robust long-term 
indicator of the adoption of interoperable EHRs that could be used for 
(1) bench marking progress towards meeting the President's EHR goal and 
(2) informing Federal policy decisions that would catalyze progress 
towards reaching this goal. Therefore, HHS awarded a contract to the 
George Washington University and Massachusetts General Hospital Harvard 
Institute for Health Policy to support the Health IT Adoption 
Initiative. The new initiative is aimed at better characterizing and 
measuring the state of EHR adoption and determining the effectiveness 
of policies to accelerate adoption of EHRs and interoperability.

Federal Health Architecture
    Now that HHS has established an infrastructure to address standards 
harmonization, compliance certification, nationwide health information 
network architecture, security and privacy, and EHR adoption 
measurement through its contracts, there is a need to gain the Federal 
perspective in these and other Federal health information technology 
areas. To accomplish this, we are looking to the Federal Health 
Architecture (FHA), an OMB line of business, established on March 22, 
2004 and managed by ONC to create interoperability and increase 
efficiency within the public sector. To better meet the President's 
health IT goals, FHA as of March 2006 has been realigned to provide the 
federal perspective using the processes created within ONC to ensure 
that interoperability exists within and between the public and private 
sector. FHA will achieve this refined vision by providing input into 
the established infrastructure and guidance for implementation within 
the public sector. Moving forward, FHA will be representing and 
coordinating the federal activities in all matters relating to the 
President's health IT plan.

    Thank you for the opportunity to update you on the progress we are 
making in the area of health information technology. HHS, under 
Secretary Leavitt's leadership, is giving the highest priority to 
fulfilling the President's commitment to promote widespread adoption of 
interoperable electronic health records, and it is a privilege to be a 
part of this transformation.
    This concludes my prepared statement. I would be pleased to answer 
any questions.


    Chairman JOHNSON. Thank you very much, Dr. Brailer.
    Mr. Morris?


    Mr. MORRIS. Good afternoon, Madam Chairman and Members of 
the Subcommittee. I am Lewis Morris, Chief Counsel at the U.S. 
Department of Health and Human Services Office of Inspector 
General. I appreciate the opportunity to discuss the OIG's 
proposed safe harbors under the Federal anti-kickback statute 
for certain arrangements involving electronic health records.
    Let me begin by stressing that the OIG and the Inspector 
General share Secretary Leavitt's commitment to fostering the 
widespread use of health IT. In furtherance of this goal, the 
OIG has sought to lower perceived barriers to the adoption of 
this technology by proposing safe harbors to the Federal anti-
kickback statute.
    The process of crafting these particular safe harbors 
requires the OIG to balance the goals of advancing the use of 
health IT with the objective of this important criminal 
statute: the elimination of potential financial conflicts of 
interest in the Federal health care programs. We are in the 
process of developing rules that we believe will strike an 
appropriate balance.
    The Federal anti-kickback statute reflects the 
congressional determination that determining potential 
financial conflicts of interest from the Federal health care 
programs will help ensure Federal health care decisionmakers 
are not tainted by inappropriate financial influence. Financial 
incentives linked to referrals create risks of over 
utilization, increased costs to the Federal programs, 
corruption of medical decisionmaking, and unfair competition 
for providers that cannot or will not pay similar incentives.
    Providing free goods and services to referral sources 
presents a heightened risk of fraud and abuse. In our 
experience, arrangements that reduce overhead--such as free 
equipment--or administrative expenses--such as free support 
staff--provide a clear economic benefit to the recipient and, 
therefore, can be a kickback. The risk of abuse grows as the 
value of the free goods and services increases. Simply put, if 
one purpose of the provision of free health IT is to reward 
referrals of Federal health care business, the anti-kickback 
statute is implicated.
    Notwithstanding these integrity concerns, the use of health 
IT promises to reduce medical errors, improve quality of care, 
and provide better information for patients and physicians. 
Accordingly, Congress directed the issuance of a limited safe 
harbor for donations of IT necessary and used solely for the 
electronic prescribing of drugs. The safe harbor parameters 
established by Congress evidence a careful balancing of the 
policy goal of promoting health IT with the need to prevent 
fraud and abuse.
    However, industry stakeholders express some concern that a 
safe harbor limited to electronic prescribing technology would 
be neither useful nor practical. In response to this call for 
broader safe harbor protection, the OIG proposed two additional 
safe harbors for electronic health record arrangements.
    In developing these proposals, we undertook to balance the 
interests of promoting this important technology with the need 
to protect the Federal health care programs from abuse. As part 
of this analysis, we proposed factors that, taken together, 
would likely sever any link between remuneration and referrals. 
In other words, we tried to construct a safe harbor that would 
prevent the very conduct Congress had identified as unlawful--
payment for referrals.
    Let me describe in one fell swoop the measures we propose: 
a cap on aggregate value of the donated technology; a 
definition of EHR that would require it to be the core function 
of the technology; an anti-solicitation provision--in other 
words, recipients cannot shop their business; a requirement 
that arrangements between donor and recipient be transparent; 
restrictions on links to the value or volume of referrals; and 
    We are currently evaluating which combination of safeguards 
will be most effective. For example, we are considering 
allowing some flexibility in the selection of recipients if IT 
interoperability could be ensured. Our next step will be to 
finalize the electronic health record safe harbor, and 
ultimately our goal is to harmonize two essential public 
policies: fostering the widespread adoption of beneficial 
electronic health record systems, and preventing fraud and 
abuse in the Federal health care programs.
    This concludes my prepared remarks. I would be pleased to 
answer questions you may have.
    [The prepared statement of Mr. Morris follows:]

Statement of Lewis Morris, Chief Counsel to the Inspector General, U.S. 
                Department of Health and Human Services

    Good morning Madam Chairman and Members of the Subcommittee. I am 
Lewis Morris, Chief Counsel at the U.S. Department of Health and Human 
Services' Office of Inspector General (OIG). I appreciate the 
opportunity to discuss OIG's proposed safe harbors under the Federal 
anti-kickback statute for certain arrangements involving electronic 
health records technology.
    The process of crafting these particular safe harbors requires OIG 
to balance the policy goal of advancing the use of health information 
technology with the objective of this important criminal statute: the 
elimination of potential financial conflicts of interest in the Federal 
health care programs. Working collaboratively with our government 
partners and considering the many constructive comments we received 
from industry stakeholders, we are in the process of developing rules 
that we believe will strike an appropriate balance.
    Let me begin by stressing that the Inspector General shares 
Secretary Leavitt's commitment to the goal of fostering patient safety, 
quality of care, and efficiency in the delivery of health care through 
better and more widespread use of health information technology. Fully 
interoperable electronic health records systems will ensure that all 
patients will reap the benefits of the technology no matter where they 
receive their care. The promotion of this technology, including 
electronic health records, is among Inspector General Levinson's top 
priorities. In furtherance of this goal, OIG sought to lower perceived 
barriers to the adoption of health information technology by proposing 
anti-kickback safe harbors that would promote the adoption of open, 
interconnected, interoperable electronic health records systems, while 
safeguarding against undue risks of fraud and abuse.
    Mindful that there are many possible approaches to such a safe 
harbor, we sought extensive public input on all aspects of our proposed 
rulemaking. The proposed safe harbors were published in the Federal 
Register on October 11, 2005 (70 Fed. Reg. 59015), and we received over 
70 comments from hospitals, health systems, and other stakeholders. The 
safe harbors, if finalized, would protect certain arrangements under 
which hospitals and other specified donors furnish physicians and other 
specified recipients with free or below-market value electronic health 
records software and related training services.
    My testimony begins with a summary of the Federal anti-kickback 
statute and a discussion of our longstanding concerns about 
arrangements involving the provision of free or reduced cost goods or 
services to potential referral sources. I will then discuss the 
provisions of our proposed safe harbor. I will not be addressing the 
proposed rulemaking developed by the Centers for Medicare & Medicaid 
Services (CMS) to create a comparable exception under section 1877 of 
the Social Security Act (the Act), commonly known as the ``Stark'' law. 
However, I assure you that we worked closely with CMS to ensure as much 
consistency between the two proposed rulemakings as possible, given the 
differences in the underlying statutes. It is our intent for the final 
rules to be similarly consistent. I am not in a position to represent 
the views of the Department of Justice, which has separate law 
enforcement authority for the Federal anti-kickback statute.

    The Federal anti-kickback statute is one of several statutes that, 
broadly speaking, seek to eliminate potential financial conflicts of 
interest from the Federal health care programs so that health care 
decisionmaking is untainted by inappropriate financial influence. Our 
Federal health care programs, including Medicare and Medicaid, rely on 
physicians and others to order or select only medically necessary items 
and services and to refer patients to providers, suppliers, and 
products based on the patients' best medical interests. Financial 
incentives linked to referrals create risks of, among other problems, 
over-utilization of items or services, increased costs to the Federal 
programs, corruption of medical decisionmaking, and unfair competition.
    The anti-kickback statute, section 1128B(b) of the Act, is a 
criminal statute that prohibits the knowing and willful offer, 
solicitation, payment, or receipt of remuneration to induce or reward 
the referral of any business payable by a Federal health care program. 
Where remuneration is paid purposefully to induce or reward referrals 
of items or services payable by a Federal health care program, the 
anti-kickback statute is violated. For purposes of the anti-kickback 
statute, ``remuneration'' includes the transfer of anything of value, 
directly or indirectly, overtly or covertly, in cash or in kind. The 
statute has been interpreted to cover any arrangement where one purpose 
of the remuneration is to induce or reward referrals. Parties that 
violate the statute may be subject to criminal, civil, or 
administrative penalties. OIG has promulgated safe harbor regulations 
that define practices that are not subject to the anti-kickback statute 
because such practices would be unlikely to result in fraud or abuse. 
However, safe harbor protection is afforded only to those arrangements 
that precisely meet all of the conditions set forth in the safe harbor. 
Compliance with a safe harbor is voluntary, and failure to fit squarely 
in a safe harbor does not mean an arrangement is per se unlawful. 
Rather, the arrangement must be evaluated on a case-by-case basis under 
the anti-kickback statute.
    OIG enforces the anti-kickback statute in partnership with the 
Department of Justice. Unscrupulous parties pay kickbacks in a variety 
of ways, and these schemes evolve over time. Often kickbacks are 
disguised as otherwise legitimate payments or are hidden in business 
arrangements that appear, on their face, to be appropriate. In our 
experience, the provision of free or below-market goods or services to 
actual or potential referral sources (whether physicians or other 
individuals and entities) presents a heightened risk of fraud and 
abuse. Simply put, the free or reduced price goods or services may be 
used as a vehicle to disguise an unlawful payment for referrals of 
Federal health care program business. Because physicians are 
effectively the gatekeepers for a substantial amount of Federal health 
care dollars, the programs and their beneficiaries are placed in 
jeopardy when a physician's ability to perform this crucial role is 
potentially corrupted by the inappropriate influence of a kickback. 
This risk grows as the value of the free goods and services increases.
    Recent kickback cases have involved referral payments in the form 
of free office space, free equipment, free office personnel, free drugs 
or other supplies, inflated or sham consulting contracts, and travel 
and entertainment to physicians by hospitals, pharmaceutical companies, 
and laboratories. In our enforcement experience, arrangements that 
result in avoided overhead expenses (such as, free support staff, free 
rent or equipment, or reduced administrative expenses) can form the 
basis of a kickback. These arrangements provide a clear economic 
benefit to the recipient in the form of savings. Unfortunately, the 
illegal use of free goods and services to reward referrals has a long 
history. For example, we addressed the issue of free computers to 
potential referral sources in the preamble to the original final safe 
harbors published in 1991. The preamble states:
    In some cases the computer can only be used as part of a particular 
service that is being provided, for example, printing out the results 
of laboratory tests. In this situation, it appears that the computer 
has no independent value apart from the service that is being provided 
and that the purpose of the free computer is not to induce an act 
prohibited by the statute. . . . In contrast, sometimes the computer 
that is given away is a regular personal computer, which the physician 
is free to use for a variety of purposes in addition to receiving test 
results. In that situation the computer has a definite value to the 
physician, and, depending on the circumstances, may well constitute an 
illegal inducement. 56 Fed. Reg. 35952, 35978 (July 29, 1991).
    We have provided similar guidance with respect to, for example, the 
provision of free phlebotomists and testing supplies by laboratories to 
physician offices. Similarly, the provision of free or below-market 
electronic health records technology by a hospital to a physician in 
the position to refer Federal program business, depending on the 
circumstances, could violate the statute.

    In connection with the new Part D outpatient prescription drug 
program, in section 101 of the Medicare Prescription Drug, Improvement, 
and Modernization Act of 2003 (MMA), Congress directed the issuance of 
a limited safe harbor under the anti-kickback statute for donations by 
specified donors to specified recipients of hardware, software, or 
information technology and training services ``necessary and used 
solely'' for the electronic prescribing of drugs. The safe harbor 
parameters established by Congress evidence a careful balancing of the 
policy goal of promoting electronic prescribing with the need to 
prevent fraud and abuse. We have proposed a safe harbor for electronic 
prescribing technology, as mandated by Congress.
    Hospital and other industry stakeholders, as well as government 
policymakers, expressed a concern that a safe harbor limited to 
electronic prescribing technology would be neither useful nor 
practical. They asserted that advancing the goals of increased patient 
safety and quality and better efficiency in health care delivery would 
require corresponding safe harbor protection for free or below-market 
electronic health records technology. These stakeholders expressed the 
view that without broader safe harbor protection for donations of 
electronic health records technology, hospitals and others would not 
provide free or very low cost electronic health records systems to 
physicians in their service areas.

    In response to the call for broader safe harbor protection, OIG 
proposed two additional safe harbors for electronic health records 
arrangements and solicited comments on how to balance the goal of 
promoting the adoption of electronic health records with the objectives 
of the anti-fraud statutes. As I have explained, the provision of free 
electronic health records technology poses all the usual risks 
associated with the provision of free goods and services to referral 
sources. If one purpose of the provision of free or below-market priced 
hardware, software or technical support is to induce or reward 
referrals of Federal health care program business, the anti-kickback 
statute is implicated. Moreover, there is a risk that a donor will use 
offers of free technology to induce recipients to change loyalties from 
other providers or plans to the donor. Notwithstanding the potential 
for abuse, in the interest of advancing the important public policy 
objective of widespread adoption of electronic health records, OIG 
proposed two safe harbors for arrangements involving electronic health 
records software and related training services: one to apply before the 
Secretary adopts interoperability standards and one to apply after. Dr. 
David Brailer is here today, and he is better able to discuss these 
standards in detail. I am going to focus my remarks on the proposed 
``post-interoperability'' safe harbor, because that proposal appears to 
be of greater interest and relevance to industry and government 
    In developing the proposed safe harbor, OIG sought to propose 
conditions that would create a balance between protecting beneficial 
arrangements while safeguarding against the undue risk of fraud and 
abuse. As described in more detail in the notice of proposed 
rulemaking, the proposed safe harbor would protect donations of 
electronic health records software and related training services, 
provided that the protected software includes an electronic prescribing 
component. The proposed safe harbor would require that the software be 
essential to and used solely for the transmission, receipt, and 
maintenance of patients' electronic health records and electronic 
prescription information. We also solicited comments on whether 
additional software applications should be protected if electronic 
health records and electronic prescribing remain core functions. We 
would not protect donations of technology that is used by a recipient 
solely to conduct personal business or business unrelated to the 
recipient's medical practice, because there would be a high risk of 
abuse and no promotion of electronic health records adoption.
    The proposed safe harbor would protect the same donors and 
recipients that Congress included in the MMA safe harbor for electronic 
prescribing arrangements. Accordingly, protected arrangements would be 
limited to: (1) hospitals donating to members of their medical staffs, 
(2) group practices donating to members of the practice, and (3) 
prescription drug plan sponsors and Medicare Advantage organizations 
donating to network pharmacists and pharmacies and to prescribing 
health care professionals. We believe these entities are the 
appropriate focus for safe harbor protection because they have a direct 
and primary patient care nexus, they play a central role in the health 
care delivery infrastructure, and they are well-positioned to promote 
widespread use of electronic health records technology that is open and 
interoperable. Notwithstanding, we solicited public comment on whether 
other donors and recipients should be included in this safe harbor.
    To promote the objectives of an interoperable health records 
system, the proposed safe harbor would require that protected software 
be certified in accordance with product certification criteria for 
interoperability adopted by the Secretary. We believe that donations of 
technology that meets uniform interoperability standards for electronic 
health records adopted by the Secretary, as well as product 
certification criteria to ensure that products meet those standards, 
will help preclude unscrupulous donors from using closed or isolated 
systems to tie recipients to particular providers or suppliers. In 
light of the enhanced protection against some types of fraud and abuse 
that would be offered by certified, interoperable systems, we indicated 
that we are considering giving donors some additional flexibility in 
selecting recipients of the technology. Specifically, we indicated that 
we are considering permitting donors to use selective criteria for 
choosing recipients, provided that neither the eligibility of a 
recipient, nor the amount or nature of the items or services provided, 
is determined in a manner that directly takes into account the volume 
or value of referrals or other business generated between the parties. 
Examples of criteria that would be appropriate under this proposed 
condition might include a determination based on the total number of 
hours that the recipient practices medicine or the size of the 
recipient's medical practice. Consistent with our objective of 
minimizing the risk of abuse, donors could not select recipients based 
on the number or value of Medicare-payable items or services referred 
to the donor. We expect that this approach would allow donated 
electronic health records technology to be provided to recipients most 
likely to use it, without protecting problematic direct correlations 
with referrals.
    This approach to selective criteria, if adopted, would be a 
deliberate departure from other safe harbors that prohibit any 
determinations that take into account, directly or indirectly, 
potential referrals or other business generated between the parties. 
This proposed approach responds to the unique policy considerations 
surrounding electronic health records systems and the Department's goal 
of encouraging their adoption. Outside the context of electronic health 
records, as specifically addressed in the proposed rule, both direct 
and indirect correlations with Federal health care business remain 
highly problematic under the anti-kickback statute.
    Finally, to reduce the risk of fraud and abuse, we indicated that 
we are considering capping or other otherwise limiting the aggregate 
value of the donated technology. In this regard, we solicited public 
comment on a range of possible options for structuring such a limit, as 
well as on the retail and nonretail costs of the technology. We also 
indicated that we would require full transparency of arrangements 
through complete and appropriate documentation.

    It is important that any safe harbor for electronic health records 
arrangements promote open, interconnected, interoperable electronic 
health records systems that help improve the quality of patient care 
and efficiency in the delivery of health care to patients, without 
protecting arrangements that serve to influence inappropriately 
clinical decisionmaking or tie physicians or other referral sources to 
particular providers or suppliers. We were mindful as we drafted the 
proposed rulemaking that there are several possible approaches to this 
safe harbor and that we did not have full information on all relevant 
aspects of such arrangements. For that reason we used the rulemaking 
solicitation as a platform to solicit public comments on virtually all 
aspects of the proposed rulemaking. The health care stakeholders 
responded by providing substantive comments on a wide range of issues. 
We are in the process of reviewing and considering those comments and 
evaluating options for the final rulemaking. Ultimately, our goal is to 
achieve an appropriate balance between fostering the adoption of 
beneficial electronic health records systems and preventing fraud and 
abuse in the Federal health care programs.
    This concludes my prepared statement. I would be pleased to answer 
any questions you or Members of the Subcommittee may have.


    Chairman JOHNSON. Thank you very much, Mr. Morris.
    Dr. Cohn?


    Dr. COHN. Good afternoon, Chairwoman Johnson, Congressman 
Stark, and distinguished Members of the Subcommittee. I am Dr. 
Simon Cohn, Chairman of the National Committee on Vital and 
Health Statistics. The National Committee is the statutory 
Federal advisory Committee to the Secretary of HHS on health 
information policy, including data standards and privacy 
issues. I am also the Associated Executive Director for the 
Permanente Federation of Kaiser Permanente. Kaiser Permanente 
is the Nation's largest integrated, nonprofit health care 
organization, serving the needs of 8.4 million members.
    I am testifying today in my capacity as NCVHS Chairman. All 
of the information I will be discussing today is available on 
the NCVHS website.
    This afternoon, I will talk briefly about the role and 
history of the National Committee, then focus hopefully most of 
the time on experience and lessons learned relating to the 
adoption of national health data standards, including some 
thoughts about how we can accelerate the standards process, and 
then finish with thoughts on current national IT and data 
standards initiatives.
    The NCVHS has a long and distinguished history. In recent 
years, Congress has directed the National Committee to play an 
important consensus development and advisory role in data 
standards, initially in HIPAA and more recently in the Medicare 
Modernization Act for e-prescribing.
    My written testimony includes recent accomplishments and 
reports related to the topics under discussion today. I do, 
however, want to briefly highlight two pieces of work.
    First, in 2001, our report ``Information for Health'' sets 
forth a vision and framework for interoperable health IT. The 
report recommended and foreshadowed many of the initiatives we 
are very excitedly seeing underway today, including the 
creation of an office to provide leadership and coordination 
reporting directly to the Secretary. This idea was later 
reflected in the establishment of the ONC.
    Second, the NCVHS report ``Uniform Data Standards for 
Patient Medical Records Information'' sets forth a strategy, 
framework, and criteria for selection of clinical data 
standards. This strategy provided the foundation for the 
selection of clinical message format standards and clinical 
terminology standards that became the core of the Federal 
Consolidated Health Informatics Initiative. Now, this work has 
provided important standards guidance and has been an important 
input into the work of ONC and the various health IT 
acceleration initiatives underway.
    With that, let me turn to our observations and lessons 
learned related to the adoption of national health standards, 
specifically as it relates to HIPAA and e-prescribing.
    With regards to the HIPAA data experience, there are 
several observations I would like to make. First and foremost, 
HIPAA implementation has clearly taken longer than anyone 
expected. Congress had expected an 18-month period to identify 
standards, followed by a 2-year implementation, followed by 
routine and frequent updates to the standards. The NCVHS for 
its part was able to meet its deadline for the identification 
of the required standards and is already working with the 
standards development organizations in relationship to updating 
of the standards. However, the actual implementation itself has 
been significantly drawn out. There are multiple factors that 
have contributed to this delay, and certainly many more than I 
have time to talk about today, but they do include things such 
as complexity and diversity of the administrative processes in 
health care, the sheer number of players involved, including 
health plans, clearing houses, and providers.
    We have moved through much of this. The bigger issue now is 
the complexity and seeming slowness of the Federal rulemaking 
process, at least as it relates to HIPAA. NCVHS has noted on 
multiple occasions that the inability to in a timely and 
orderly fashion adopt and update HIPAA standards is severely 
hampering the ability of the health care community to keep pace 
with emerging business needs.
    Let's now turn for a moment to compare and contrast this 
with e-prescribing. The NCVHS experience in recommending e-
prescribing standards was quite different from that of the 
HIPAA process. The Medicare Modernization Act (P.L. 108-173) 
(MMA) provided more flexibility, and all of this testimony from 
the industry has highlighted a critical need for a flexible and 
timely standards modification process. Luckily, the MMA 
provided some latitude for adoption of new versions of 
standards. The NCVHS recommended the concept of voluntary 
adoption of new versions of the standards if they maintain the 
base functionality and data content of previous versions, so-
called backward compatibility. This approach was incorporated 
in the final rulemaking.
    So, let me talk briefly about some of the lessons learned. 
First of all, an open, collaborative, consultating process that 
brings together the public and private sectors, such as NCVHS 
uses, is essential and was effective in both cases. Pilots also 
play a central role in road-testing new standards. Even small 
pilots yield valuable information that can help speed 
implementation and would have been helpful early on in the 
HIPAA process. We have recommended this for the claims 
attachment standard with good results, and we were delighted 
when this was being used for e-prescribing.
    Finally, for existing standards, there is a critical need 
for a standards change management process that can nimbly keep 
up with changes in business needs. One possibility might be to 
apply a process like that used for e-prescribing to HIPAA, and 
so this could have some applicability. However, since not all 
standards are backward compatible, this would not represent a 
total solution. Another option that would have applicability to 
all of the HIPAA standards could be to streamline the 
modifications process for already adopted standards by asking 
NCVHS to hold open hearings on such changes and, if broadly 
accepted by the health care industry, recommend that HHS 
utilize a modified rulemaking process in these circumstances.
    Now, in conclusion, let me briefly talk about the broader 
health IT initiatives underway and ongoing collaborations. The 
NCVHS is very pleased and supportive of the current interest 
and initiatives at the national level to accelerate the 
adoption of interoperable health IT, and the NCVHS is committed 
to help accelerate progress. In many instances, the initiatives 
move forward recommendations and approaches that arose 
initially from the work of the NCVHS, in collaboration with HHS 
and the industry.
    I have met with Secretary Leavitt, and he was very 
receptive when I offered our expertise, advice, and service in 
support of his health IT agenda, particularly in the areas of 
privacy and information infrastructure. We work closely with 
Dr. Brailer. We include briefings for Dr. Brailer at all of our 
full NCVHS meetings, and NCVHS members are included as 
technical experts in several of the AHIC breakthrough working 
groups. I also meet regularly with Dr. Brailer and have offered 
our assistance in a variety of ways, including coordination 
with and complementing the AHIC and ONC initiatives.
    Thank you for the opportunity to testify today about the 
Committee's activities related to health IT. I would be pleased 
to respond to any questions you or other Members may have.
    [The prepared statement of Dr. Cohn follows:]

Statement of Simon P. Cohn, M.D., Chairman, National Committee on Vital 
                   and Health Statistics, Oakland, CA

    Good afternoon, Madame Chairman and distinguished Members of the 
Subcommittee. I am Dr. Simon Cohn, Chairman of the National Committee 
on Vital and Health Statistics (NCVHS). The Committee is the statutory 
federal advisory committee to the Secretary of Health and Human 
Services on health data, statistics and health information policy, 
including data standards and privacy issues. I am also the Associate 
Executive Director of the Permanente Federation, Kaiser Permanente. 
Kaiser Permanente is the nation's largest integrated nonprofit, health 
care organization, serving the needs of 8.4 million members in nine 
states and Washington, D.C. The Permanente Federation is the national 
organization of the Permanente Medical Groups, the physician component 
of Kaiser Permanente.
    I am testifying today in my capacity as NCVHS Chairman. All of the 
information I will be discussing today is available on the NCVHS 
website at ncvhs.hhs.gov.
    This afternoon, I will focus my remarks on (1) the role, history 
and perspective of the Committee; (2) our experience and perspectives 
relating to the adoption of national health data standards; (3) 
reflections on how the standards adoption process might be improved and 
accelerated; and (4) our perspectives on how the various current 
national health IT and data standards initiatives can work together to 
advance the national HIT agenda.

Role, History and Accomplishments of the NCVHS
    The NCVHS has a long and distinguished history of facilitating the 
development of industry and government consensus on health data policy 
issues and data standards and providing broad based expertise and 
advice to the HHS and other federal health agencies. The NCVHS is 
established by law in section 306(k) of the Public Health Service Act 
and has a mandate to assist and advise the Secretary on a wide array of 
health care data issues. In recent years, Congress has directed the 
Committee to play a role in consensus development and an advisory role 
in data standards, initially through the Health Insurance Portability 
and Accountability Act of 1996 (HIPAA) and subsequently in the Medicare 
Modernization Act of 2003 (MMA). The Committee's HIPAA responsibilities 
included advising the Secretary on data exchange standards, code set 
and terminology standards, privacy and security standards, and 
identifiers, and in MMA, on the data standards needed to support the 
electronic prescribing provisions of MMA. The Committee is recognized 
and highly regarded for its open, well established, collaborative 
industry public-private consultation process and its timely, thoughtful 
and practical recommendations.
    Members of the Committee are appointed from among individuals 
distinguished in a wide range of health information policy areas, 
including health statistics, electronic interchange of health care 
information, privacy, security, population-based public health, 
purchasing or financing health care services, integrated computerized 
health information systems, health research, consumer health advocacy, 
health data standards, epidemiology, and the provision of health 
services. Sixteen members are appointed by the HHS Secretary, and two 
are appointed by the leadership of the Senate and the House of 
Representatives respectively. Technical experts and representatives of 
all stakeholders--including providers, plans, commercial interests, 
not-for-profit groups, governments, and consumers--provide input to 
NCVHS deliberations through regular, extensive public meetings.
    Through its advice and recommendations, NCVHS has stimulated a host 
of improvements in national and international health information 
infrastructure, data and statistics. The Committee has been associated 
with contributions in disease classification, health surveys, data 
standards, data needs for minority and other special populations, 
mental health statistics, State and community health data needs, and 
privacy protection. While the NCVHS may be best known for its work on 
data standards and health information exchange, it has played a 
significant role in public and population focused health data issues 
and needs as well.
    Recent accomplishments related to the topic under discussion today 

      Strategic Vision for Health Information Infrastructure--
The NCVHS' 2001 report, Information for Health: A Strategy for Building 
the National Health Information Infrastructure, set forth a vision and 
framework for interoperable health information technology (HIT). The 
report identified three primary dimensions that together comprise a 
national health information infrastructure--information to support the 
needs of 1) patient care, 2) population and public health, and 3) 
personal health. The report recommended and foreshadowed many of the 
accomplishments and initiatives we see underway today, including the 
creation of an office to provide leadership and coordination for the 
development of the National Health Information Infrastructure (NHII), 
reporting directly to the Secretary, an idea later reflected in the 
President's Executive Order and the HHS initiative to establish the 
Office of the National Coordinator for Health Information Technology in 
      Strategy for Healthcare Information Interoperability--In 
2000, the NCVHS published a report, Uniform Data Standards for Patient 
Medical Records Information, that set forth a strategy, framework, and 
criteria for selection of clinical data standards. This strategy 
provided the foundation for the selection of clinical message format 
standards (2002) and clinical terminology standards (2003) that have 
become the core of the Consolidated Health Informatics Initiative.
      Electronic Prescribing--The Medicare Modernization Act 
directed NCVHS to identify and recommend standards for e-prescribing 
that could be used in implementing the new Medicare Part D benefit. 
NCVHS accelerated its schedule of meetings and proposed an initial set 
of well-established standards that were later incorporated into a 
proposed rule. This allowed the industry to fill standards gaps and 
harmonize related standards in time for e-prescribing pilot tests 
beginning in January 2006. The process also served as a model for 
obtaining industry input into the regulatory process.
      Personal Health Records--Last September the NCVHS issued 
a report of findings and recommendations concerning electronic personal 
health records and personal health record systems. Based on six public 
meetings, the report describes the current heterogeneity and state of 
the art in PHR concepts and systems, discusses the potential roles that 
PHR systems could play in improving health and health care and 
furthering the broader HIT agenda, and sets forth 20 recommendations 
for moving forward.
      Population Health--Recommendations in the Committee's 
report, Shaping a Health Statistics Vision for the 21st Century, 
described a model of the influences on the population's health and 
established guiding principles to improve integration and coordination 
of health data and information used by policymakers, researchers, and 
the public to improve health.
      Eliminating Health Disparities: Strengthening Data on 
Race and Ethnicity--Released last November, this NCVHS report 
identified a number of opportunities and recommendations for improving 
data on race and ethnicity to help understand, measure and eliminate 
disparities in health and health care.
      HIPAA Administrative Simplification Data Standards--In 
HIPAA, Congress directed the Committee to assist and advise HHS in the 
adoption of a range of industry consensus data standards to support 
administrative simplification in health care. The standards included 
data transaction standards, code sets and terminology standards, 
privacy and security standards and identifiers. For the last decade, 
NCVHS recommendations formed much of the basis for the subsequent HHS 
regulations adopting the standards for use in administrative 
transactions in health care. NCVHS also advises HHS on HIPAA 
implementation progress and prepares an annual report to Congress on 
the progress of the HIPAA data standards initiative.

Improving and Streaming the Standard Adoption Process: Lessons Learned
    Based on NCVHS experience in working with the industry and 
assisting and advising on the adoption of various types of data 
standards, several ``lessons learned'' have emerged for improving the 
overall process.

HIPAA Administrative Simplification Standards
    NCVHS has advisory responsibilities for assessing the impact of the 
adoption and use of transactions and code sets that are ultimately 
adopted under the administrative simplification provisions of the 
HIPAA. The process starts when the various standards development 
organizations (SDOs) work with their membership to reach consensus on 
HIPAA transactions and code sets that need to be adopted or modified 
and those changes are brought to NCVHS for review. The Committee 
generally explores these recommendations through its established open 
meeting process. The NCVHS process ends with a recommendation letter to 
the Secretary of Health and Human Services based on the testimony that 
was provided. Further Department evaluation, based on the 
recommendations, usually results in the start of the required rule 
making process.
    With regard to HIPAA data standards, there are several lessons that 
the Committee gleaned through the numerous meetings that have taken 
place since this landmark legislation was passed a decade ago. HIPAA 
implementation has taken longer than expected. Our explanation for this 
includes the complexity and diversity of administrative processes in 
healthcare, the number of players involved, and the complexity of the 
federal rulemaking process.
    NCVHS testimony noted that inability to effect timely and orderly 
introduction, adoption and updating of HIPAA standards severely hampers 
the ability of the public and private sectors to keep pace with 
emerging needs, especially in the rapid acceleration toward the 
adoption of EHRs. The unpredictability of the time needed to complete 
all of the steps in the federal rule making process create an uncertain 
environment in which it is difficult for providers, payers and vendors 
to influence or anticipate upcoming changes and develop business 
products and processes to accommodate them. The inability in a timely 
fashion to adopt new versions of standards under HIPAA coupled with the 
uncertainty of the timing of changes prevents the HIPAA community from 
evolving to new standards that address current business needs. The 
NCVHS continues to believe that the full economic benefits of 
Administrative Simplification will only be realized when all the 
standards are in place and when an orderly change management process 
has been successfully established.

Electronic Prescribing Data Standards
    NCVHS' role and experience in recommending e-prescribing standards 
was entirely different from that in the HIPAA process. The MMA 
specified that NCVHS should develop recommendations on standards used 
for e-prescribing under the new Medicare Part D drug benefit. It 
included a fairly long list of needed standards functionality for e-
prescribing. The MMA additionally specified that some of these 
standards could be adopted immediately after rulemaking without pilot 
testing if they had adequate industry experience while the remaining 
standards would need to be pilot tested during calendar year 2006 and 
subject to subsequent rulemaking.
    Based on the specificity and rigorous time frames of the MMA, NCVHS 
had 18 months to complete its work on this emerging topic. The 
Committee held several meetings to understand the current e-prescribing 
process and identify the relevant stakeholders in order to ensure 
balanced testimony. NCVHS then proceeded with meetings on the existing 
e-prescribing environment, and identified gaps in terms of the specific 
standards required by the MMA and specific supporting standards needed 
by the industry.
    The process concluded with two comprehensive recommendation letters 
developed in partnership with various industry groups that were sent to 
the HHS Secretary. NCVHS' recommendations on e-prescribing standards 
that could be adopted without pilot testing were adopted in a final 
rule in November 2005 that laid out ``foundation standards'' for use in 
Part D. NCVHS' other recommendations on standards that needed to be 
pilot tested were incorporated into the required pilot tests that began 
on January 1, 2006, as specified by the MMA.

Moving Forward and Lessons Learned
    The NCVHS' open, collaborative process has repeatedly proven its 
effectiveness. NCVHS has served as an honest broker for a wide range of 
issues and stakeholders. This process has been used to provide advice 
and guidance on the HIPAA standards. The value of this process was 
especially apparent for recommendations for e-prescribing standards 
under the MMA, when the NCVHS identified the relevant stakeholders, 
brought them to the table, and broke new ground in terms of identifying 
standards, gaps, and workable solutions. This additionally was 
accomplished within the confines of tight timeframes and content 
requirements imposed by the statute. Because of the way NCVHS 
structured its process, the industry voluntarily coalesced to develop 
solutions that would benefit all stakeholders.
    Pilot testing plays an essential role in ``road-testing'' new 
standards. Even small pilots yield valuable information that can help 
speed implementation.
    Establishing standards for transactions does not automatically lead 
to complete standardization of business practices. There will always be 
variation, but industry efforts to reduce unnecessary variability in 
business rules should be encouraged.
    There is a critical need for a standards change management process 
that can nimbly keep up with changes in business needs. One possibility 
might be to widely implement a process analogous to the e-prescribing 
voluntary adoption process, where the adoption of new versions of 
standards are allowed as long as they are backward compatible, for 
other standards, including HIPAA. However, since not all SDO standards 
are backwards compatible, this would not represent a total solution. 
Another option could be to streamline the adoption of version changes 
to already adopted standards by asking NCVHS to hold open meetings on 
such changes, and if broadly accepted by the healthcare industry, 
recommend that HHS utilize a modified rulemaking process in these 

Moving Forward on Data Standards and Interoperable Health Information 
    The Committee is very pleased and supportive of the current 
interest and initiatives at the national level to promote and 
accelerate the adoption of interoperable health information technology 
to improve health and is both eager and committed to helping to move 
progress forward. In many instances, the initiatives reflect concepts 
and recommendations and approaches that arise directly from the 
productive and collaborative relationship involving the NCVHS, HHS and 
the industry.
    To this end, I met with Secretary Leavitt last June to discuss the 
role that the National Committee on Vital and Health Statistics could 
play in supporting this agenda for improving health and health care 
through advances in interoperable health information technology, and I 
was gratified with his enthusiastic response when I offered our 
expertise, advice and service in support of his HIT agenda. During the 
inaugural meeting of the American Health Information Community, 
Secretary Leavitt indicated that he would be relying on the NCVHS for 
expertise and advice on advancing the national Health Information 
Technology agenda, particularly on privacy and information 
infrastructure issues.
    I have also met with David Brailer and have indicated that the 
Committee stands ready to assist and advise HHS in a number of ways, 
including coordinating with and complementing the American Health 
Information Community for achieving objectives ofnationwide electronic 
records that will result in improved health. The AHIC is currently 
focusing its efforts onachieving rapid breakthroughs in specific areas 
and achieving industry executive level interest and buy-in.
    In addition, to further enhance coordination, we include briefings 
and updates from Dr. Brailer at all of our full committee meetings,and 
NCVHS members are included as technical experts on several of the AHIC 
breakthrough Working Groups. We are continuing to work with Dr. 
Brailer's office to explore additional areas for collaboration.
    As I indicated to you earlier, the Committee welcomes the new roles 
that are possible for NCVHS with respect to working with the AHIC and 
the national health infrastructure agenda generally.

    Thank you for the opportunity to testify today about the 
Committee's activities relating to health information technology. I 
would be pleased to respond to any questions that you or other Members 
might have.


    Chairman JOHNSON. I thank the panel, each of you, for your 
excellent testimony.
    Dr. Cohn, I am very, very interested in this standards 
change management process. You do not just insert technology. 
Technology creates an environment of continuous improvement, 
and if it does not create that mental environment, that team 
environment, and that technological environment, you do not get 
the benefit of the technology. So, I think your point is very 
well taken, and if any of the panelists on this panel or the 
following panel disagree, I want to hear about it, because I 
want to work with you all to see if there is anything we need 
to do to help you to develop that ability to simply upgrade and 
modernize and manage the changing standards we need in 
technology as technology changes.
    Dr. Brailer, I wanted to ask you to describe a little more 
in-depth this project you have gone on with the National 
Governors Association. We have a provision in our bill that 
just looks at those things, but I am interested in what you are 
doing and what you have laid out and what your task is to them, 
both in terms of the internal relation issues within a State 
between the State privacy rules, regulations, and statutes and 
so on, and electronic implementation, but also between States 
and with the Federal Government and difficult issues like 
mental health that we struggle with.
    Dr. BRAILER. Well, clearly, we felt that we had primary 
responsibility for not letting the technical innovation and 
technical projects go forward in the absence of a policy 
framework that brought along privacy and security, and that is 
what motivated the project. Our particular concern was that 
there was a lot of debate about what was good or bad about 
HIPAA but not a lot of forward thinking about what does the 
digital era of medicine mean when information is quite free 
floating, regardless of what technical solution we might use, 
that is being made available and being much more portable.
    We wanted to engage the States on this primary from the 
beginning because the States are the ones who have largely set 
the privacy tone for many of the citizens because so many 
States have superseded the minimum requirements of HIPAA. So, 
what we have done is put together Federal leaders, the 
government as well as other leaders, other experts at the 
national level, with a representative, designees from each 
State--again, there are 43 States. We had seven States who 
elected not to participate in this process. They have two 
obligations: first, within their State, to look at their own 
State laws and to begin evaluating issues in the laws, 
variations in the laws, holes, absences, issues that they feel 
are incomplete, and to come together and get some 
recommendations at the State level about where they think there 
should be changes; and, secondly, to have the States come 
together as a whole and begin developing national consensus, to 
begin asking what does the privacy framework look like for the 
United States as we go forward. I will raise a couple of 
    First, there is a lot of discussion, as one example, about 
the accounting rules. How does one keep track of who sees 
health information, personal health information? It turns out 
this is an issue that is quite contentious because of paper. It 
is hard to do this with paper, and it is hard to protect it 
with paper. In an electronic era, we have a new opportunity to 
begin moving away from that contentiousness to say accounting 
should be easily part of the electronic infrastructure. It is 
not a cost burden on providers, it is easily practiceable, and 
it gives us a new level of security. So, that is an opportunity 
that we want to pursue that the electronic infrastructure 
brings forward.
    On the other hand, there are new challenges. Many people 
are talking about putting their information in a personal 
health record that is an independent entity, not sponsored by 
their doctor or their hospital or their health plan, or to use 
HIPAA-esque language, not a covered entity. That means that 
that entity does not have requirements or restrictions or 
regulations or penalties if they abuse personal health 
information. We think that there needs to be a look at how do 
we begin asking this question of bringing everyone into the 
    We are particularly concerned about the mental health area 
because so many of the States have, rightly, begun identifying 
mental health-related information as protected information that 
should not be made available to prevent stigma, which is an 
appropriate action. On the other hand, people in the mental 
health community have begun discussing with us the concerns 
that so many drug-drug interactions occur around or because of 
mental health medications, that if we simply blunt those from 
being made available, if we just say not available at all, we 
will create a situation for many mental health patients where 
they have to choose between stigma or death. We do not want 
that to happen. We want to make sure we develop the thinking 
that allows us to protect that, but make it available in some 
way that they do not face a dangerous drug-drug interaction.
    This group is expected to report in 9 months, to have a set 
of consensus recommendations about what should be looked at, 
what this should look like, what policy changes are required at 
the Federal level or State level, and that will be done in a 
public way so all of us can look at it. I think it is the first 
forward-looking evaluation of privacy and security as we move 
into this information age of health care.
    Chairman JOHNSON. That is very interesting. My time has 
expired. I need to come back with a question about the role you 
see for government, if there is time, but I am going to yield 
to Mr. Stark.
    Mr. STARK. Thank you, Madam Chair.
    Dr. Cohn, how long have you been with NCVHS?
    Dr. COHN. I have been a member of NCVHS since 1996.
    Mr. STARK. Bingo. So, you were there in August 1996 when 
they came out with the report on the NCVHS with core health 
data elements, right?
    Dr. COHN. I was just coming onto the Committee at that 
    Mr. STARK. What has changed since 1996? How would you 
revise these core health data elements? Pretty good still, 
aren't they?
    Dr. COHN. Well, Mr. Stark, Congressman Stark, I will 
apologize, but I have to say it has been some time since I have 
reviewed them.
    Mr. STARK. Nobody else has either, so don't feel bad.
    Mr. STARK. In other words, all we are hearing today is a 
lot of gobbledygook today about reinventing the wheel. You guys 
did this--I guess what I am getting at is that I am afraid 
NCVHS has sort of been out of the loop here, and I am afraid 
that a lot of the programs we are hearing about are duplicating 
work that has already been completed. Is that a fair statement?
    Dr. COHN. I actually do not believe that the work being 
done is replicating work that has already been completed. I 
think the role of the National Committee and much of the work 
that we have done has been forward thinking work and at a 
    Mr. STARK. That was 1996. We are now----
    Dr. COHN. Well, I am referring to the work of the last 10 
years since I have been on the Committee, but with the issue 
being that it is one thing, for example, to recommend that we 
have implementation guides with enough specificity to ensure 
    Mr. STARK. Bingo.
    Dr. COHN. It is another thing to actually do it.
    Mr. STARK. Well, we will get to the ``do it'' in a minute. 
First of all, Kaiser has a system now--do you believe that we 
should, first of all, deal with an open-source solution here so 
we don't have guys with proprietary ways to keep the rest of us 
from knowing what is going on? Have you got any objection to an 
open-source system?
    Dr. COHN. Well, I don't think I have an objection. Wearing 
my hat as NCVHS, I don't think we have an opinion on it.
    Mr. STARK. You don't have any objection to it.
    Dr. COHN. No, certainly not.
    Mr. STARK. Okay. Put your Kaiser hat on for a minute. 
Kaiser has a fairly elaborate and comprehensive system of 
electronic data recordkeeping, does it not?
    Dr. COHN. Yes.
    Mr. STARK. If we instigated a different system for Kaiser 
through some great Federal law and it was substantially 
different, it would cost Kaiser a good bit of money, wouldn't 
it, to have to change and retrain and do everything over again, 
wouldn't it?
    Dr. COHN. I was trying to avoid----
    Mr. STARK. For any--for Blue Cross, it would be a 
substantial change.
    Dr. COHN. Sure.
    Mr. STARK. Any practicing physician, if we continue with 
these multiple versions, is going to have to learn several 
systems, won't that physician? Because Blue Cross will have a 
system and somebody else will have a system and Medicare will 
have a system, and they will have to fill it out differently 
unless we mandate a universal system. Does that make sense to 
    Dr. COHN. Well, I think the National Committee has taken a 
different view on this over the years, and----
    Mr. STARK. Well, I am not as--okay, go ahead.
    Dr. COHN. Okay. Well, no, I think that rather than a 
universal system, what we want to have is enough 
interoperability between systems that the data flows easily, is 
understandable and recognizable----
    Mr. STARK. Okay. How about the core health data, those 
elements? Should that be universal? I can go down the list for 
you. If you want----
    Dr. COHN. Sure.
    Mr. STARK. Name or a unique identifier?
    Dr. COHN. I will agree to that.
    Mr. STARK. How about date of birth? That should be in all 
the records, shouldn't it?
    Dr. COHN. Well, sure. It----
    Mr. STARK. Okay. Gender, race and ethnicity? You got any--
    Dr. COHN. No.
    Mr. STARK. Residence, marital status, self-reported health 
status, functional--all of those things most people would agree 
to, wouldn't they?
    Dr. COHN. Well, certainly.
    Mr. STARK. Okay. Well, why don't we get going? Why don't we 
just lock that one up and say, okay, that is done? You did it 
in 1996. Do we have to wait another 10 years until--why are we 
repeating all this stuff? That is what I do not understand. 
Just to give a bunch of private guys who want to peddle systems 
a chance to have different systems? I am just afraid that your 
Committee has done a lot of work and it is being ignored and 
that we are reinventing wheels here day after day. Unless 
somebody says that on a day certain, January 1, 2007, it will 
be a Federal law that all data is collected in this manner, 
with an open-source system and made available in a government-
run library, I am just--it will be wrong, whichever way we do 
it, and we will have to adjust it as we go on--it will never 
get done. Kaiser will go on with their system, and the 
University of California will go on with their system, and 
Health WellPoint will go on with their system, and 10 years 
from now they won't talk to each other.
    Do you see any other alternative, unless it is mandated 
by--I hate to use ``the Federal Government.''
    Dr. COHN. Let me try to address your questions, and I 
certainly do not have the answer to what you are describing, 
but I do want to reflect--and I think at least as I talk about 
the work that is going on now and the work that has happened 
over the last 7 to 10 years, which really is, to my view, the 
creation of the foundational pieces of the infrastructure, 
which is really HIPAA, which deals not with every single data 
element you are talking about, but as part of the 
administrative and financial transaction, it does begin to 
set--it sets standards. Now, it does not create systems, but it 
creates the standards that allow systems to communicate their 
data back and forth in a common fashion.
    So, with HIPAA, even though the process is not perfect and 
I think we need to fix it, we are seeing identifiers coming 
forward. We have seen basic privacy. We are seeing security 
rule. We have many of the data elements and transactions, 
including claims and other types of transactions. So, when I 
talk about----
    Mr. STARK. What is missing? What do we need to get started?
    Dr. COHN. Well, that is actually already working, but that 
does not move us really into the clinical realm.
    Mr. STARK. What is needed to get us there?
    Dr. COHN. Well, I think we need to have some validation 
that the standards are the right standards, which is, I think, 
the work that ONC and the initiatives are doing, which is going 
back looking at all the work, another validation that X 
standards are the right standards to work with going forward as 
we implement more widely.
    David, you may want to join in.
    Mr. STARK. Well, my question is we have got VistA and it 
works. Right?
    Dr. COHN. Yes.
    Mr. STARK. It works well. Why not use that? Could Kaiser 
live with it if we paid the money that you would need to 
convert? What would happen if patients--my in-laws in San 
Lorenzo, would their care be as good as it is now at Kaiser if 
they had VistA?
    Dr. COHN. Well, can I make the following comment? I----
    Mr. STARK. Sure.
    Dr. COHN. First of all, unfortunately, I am probably going 
to meld my hats for a minute here, but I think we all think 
that VistA is a wonderful system and it is highly functional. 
The VA has made tremendous use for it, and certainly in 
testimony before the NCVHS and I am sure probably before you, I 
think we have all been impressed with what it can do. You will 
hear other testimony later on today, but I think as we have all 
evaluated it the issues get to be, to a certain extent, 
transportability, integration with other systems. I think as--
and maybe even on a higher level, when you look at the total 
costs of implementation of health IT into environment, only a 
piece of it is the IT system. So, much of it is actually sort 
of dwarfed by education, training, support, all of those other 
    So, as I said, great system, but you just need to keep 
aware of----
    Mr. STARK. That is going to happen whenever you have--
Kaiser is going to get hit with that if it is not the Kaiser 
system, aren't they? Or WellPoint is going to get hit with it 
if it is the Kaiser system. Because whatever you pick, if there 
is a uniform system, somebody is going to have to learn a new 
language or a new procedure. Arguably, we cannot--and if we 
just say, well, okay, we are going to leave Kaiser where they 
are and VistA where it is and WellPoint where it is, then we 
are not going to have the system we all think we should have. 
The idea that you think you are going to pick one best system I 
despair of. I think we are going to pick a system that, as I 
have said to the Chair often, will not work. We will have all 
kinds of complaints, and we will be up here having hearings 
forever, and I will not be able to have the courtesy of going 
over my time limit, and we will have to change it, but we could 
be doing it while we change it.
    Thank you, Madam Chair.
    Chairman JOHNSON. Mr. Stark, do notice that I have given 
you the courtesy of going over time.
    Mr. STARK. I do appreciate it very much.
    Chairman JOHNSON. Because you did ask a core question, and 
I think it is so important that we ought to let Dr. Brailer 
respond, too, because as I understand your core question, it 
is: What are the consequences of picking a single technology 
for the system? Beyond that, are we spinning our wheels? Do we 
already know this and we are just spinning our wheels to get a 
lot of companies involved in whatever? So, if Dr. Brailer would 
like to comment, I think it would be useful because this is a 
foundational question you have asked.
    Dr. BRAILER. I think it is actually a good question, and it 
is one that we certainly spend a lot of time looking at.
    I, too, share the support for the VA system, but I think 
the miracle of the VA system is not the software. It is the 
size of the VA, its scale, its ability to deliver and develop 
such a system, its single budget that allows it to actually 
look at the savings that it creates and invest those to some 
degree back into its systems, and the fact that it is immune 
from the kinds of siloing that some of the rules in the Federal 
Government create that allow it to act like a seamless system.
    We could not just export those elements of the VA miracle 
to doctors and hospitals through software. We know that Kaiser 
is a good example, and many doctors are like this, that the 
challenge they face is not software. Software is the minor 
component of the cost they face whenever they convert over to 
electronic systems. It is productivity loss. It is training. It 
is the cost of conversion of their systems. The saying in the 
industry is, I think, true here: Free is not cheap enough. We 
cannot just give software to doctors and expect it to be the 
right thing for them. If we give it to them with a mandate, 
then I think we face the challenge that we are creating a 
technological obsolescence, because no system is perfect today, 
and we will be left with the standards or the other mechanisms 
that are inherent.
    The approach we are taking is more organic. It is certainly 
one that even Britain, which I think has a health care system 
that some people would think is more what the United States 
should have, is following: multiple different systems that are 
communicating through standards, through government-supported 
standards that require systems to connect to each other, to be 
able to share information seamlessly regardless of how the 
vendor works.
    This is how the Internal Revenue Service (IRS) is working 
with e-filing, since we are coming close to tax filing day. The 
IRS does not supply software to tax filers. Different companies 
do, but they all have to meet the IRS filing standard.
    This is how banks work with Automated Teller Machine (ATM) 
software that is used by people around the United States. The 
Federal Government does not supply that software, but it 
mandates the standards for how those are used.
    This is how cable communications work for our television. 
They are not supplied by the Federal Communications Commission.
    I think we can follow this in health care, and we have made 
imposing a set of hard-coded, required standards job one. You 
see that through the certification process, which we have 
directly linked into the self-referral and anti-kickback safe 
harbor that we have proposed, that we are linking government 
policies to the use of those standards. I think this is the way 
to go that preserves both the best of innovation, the best of 
our investments to date, and something that does achieve the 
vision that many of us have for the future.
    Chairman JOHNSON. Thank you very much, Dr. Brailer.
    Mr. Hulshof?
    Mr. HULSHOF. Thank you, Madam Chair.
    A great analogy, Dr. Brailer, especially as I have immersed 
myself in our tax forms trying to reach the deadline, and, 
again, there are a variety of products out there on the market, 
but the standards must be a certain level.
    Let me, in fact, pick up a word you used about obsolescence 
and talk specifically about ICD-10. One of the things--and, Dr. 
Cohn, you referenced the panel that is coming, and one of the 
advantages of getting to peruse statements and testimony that 
is likely to come, it is my understanding that ICD-9 is running 
out of codes in certain categories, at least on the procedural 
side, and one specific--CMS has started placing things like 
breakthrough cardiac devices into unregulated procedure 
categories. So, I wanted to get you with your hat for NCVHS 
which has in the past gone on record stating that ICD-9 is 
``increasingly unable to address the needs for accurate data 
for health care billing, quality assurance, public health 
reporting, and health services research.''
    In fact, I think back in 2003, NCVHS also said that moving 
from ICD-9 to ICD-10 would be ``in the best interest of the 
    First of all, do you still stand by those statements of 
    Dr. COHN. Certainly the Committee does.
    Mr. HULSHOF. To sort of anticipate some of the criticisms 
of moving in that regard, do you think ICD-10 will lead to 
improved billing, quality assurance, public health reporting, 
health services research? What are the benefits of ICD-10?
    Dr. COHN. Well, in preparation for this session, I went 
back and actually reviewed the November 2003 letter, and I was 
reminded that this was based on a combination of eight hearings 
plus we actually commissioned a Rand study to actually look at 
the costs and benefits, because this was such a contentious 
issue in the industry. I don't know what your other hearings 
are going to be like today or have been previously, but I 
suspect that it will continue that theme.
    After much deliberation, I think the Committee came away 
believing that the costs and benefits were--that the benefits 
obviously outweighed the costs of moving to a new code set for 
diagnoses and procedures, in other words, replacing ICD-9 CM, 
both diagnosis and procedures.
    Now, if you look at our letter, I think we also felt that 
there was really a need to move to a (Notice of Proposed 
Rulemaking process, among other things to really in a 
structured way better understand from the industry if there 
were ways that we could help support the implementation, do it 
better, minimize costs of implementation, support the 
transition--all of the things that if you are thinking about a 
large project you would like to know up front. So, we thought 
it would be a very valuable thing, and indeed, as we were 
talking about it this year or at the NCVHS, we decided it was 
time to ask the department ourselves for a briefing on exactly 
where they were since, I think as you commented, it has been a 
couple of years now since that letter was sent to them.
    I would, of course, remind everyone that as part of the 
NCVHS statutory responsibilities under HIPAA, ICD is a HIPAA 
medical code set, and so it is really our responsibility to--
and this is really yet another version change issue in HIPAA. 
It becomes really our responsibility to look at this and try to 
provide the Secretary the best advice upon which to base 
    I don't know if I have answered your question, but at least 
I have talked some about it.
    Mr. HULSHOF. I appreciate that.
    Dr. Brailer, in the few moments I have remaining, I want to 
shift gears a bit and pick up on something in your written 
testimony. In fact, you alluded to it in your oral testimony 
about secure messaging. In specific, there is a high-profile 
incident in Missouri, a former United States Senator, Ms. 
Carnahan, who had a heart incident, and because of remote 
monitoring, a very positive outcome. So, I want to touch base 
just briefly.
    I think remote monitoring holds great promise for managing 
chronic disease, as you reference in your testimony, whether it 
is congestive heart failure, diabetes, arrhythmia, a host of 
other potential maladies. So, I think everyone would agree it 
is a particularly valuable tool.
    My question is: Given that Medicare does not often 
reimburse for remote patient management services, what options 
do you think are necessary to support and promote the use of 
technology like remote monitoring?
    Dr. BRAILER. It is a really good question, and I think your 
observation that the transformation of remote monitoring and 
telemedicine and the ability to actually support health care 
where the doctor and the patient are not in the same room 
together is something that will not only change chronic care 
management, but we see it being a primary tool in prevention, 
where health care prevention is occurring in someone's home, 
not when they go to the doctor.
    So, it is really a great potential, and we chose the 
physician-patient communication, the secure messaging, as if--
the thin end of the wedge, if you would, to start with 
something that is quite discrete and quite in demand, because 
it really is precedent-setting with respect to all of these 
remote services.
    There are a few enablers. Privacy and security is one of 
them. There really are unusual circumstances raised through 
remote monitoring because it goes through entities that are not 
considered in prior laws. So, we have to look at that.
    There are standards issues. There are not standards in all 
of the areas where we want to do remote monitoring. It is a new 
area that has not been considered. It has been very much, if 
you would, the standard orthodox concept of a laboratory test 
or something not remote telemetry or things like that. So, we 
have some standards issues that we are dealing with. We clearly 
have the issue of the reimbursement, the cost issue.
    Now, with secure messaging, it turns out that clinicians 
get a substantial benefit because they are taking phone calls 
anyway. Secure messaging lets them do what we all do with e-
mail, which is respond to them all at the end of the day.
    I think as we go out into these questions of telemedicine, 
e-ICUs, remote ambulatory chronic monitoring, there is not a 
very good concept of this cross-site model. So, what we are 
going to do with this is begin exploring and looking at 
demonstration projects that can understand what the 
configuration is that is necessary. Who does the information go 
to? What is their responsibility to act? Within what time? How 
does that relate to traditional primary care?
    Those demonstrations will help us sort out that 
configuration, which will have economic implications that we 
would like to bring forward. So, we are going to start with 
this piece and make it work, and then carry it out through a 
number of other areas.
    Chairman JOHNSON. Mr. Emanuel?
    Mr. EMANUEL. Thanks, Madam Chair.
    Dr. Brailer, I was going to ask about privacy, but in your 
answer to a follow-up question that the Chair had asked to 
Congressman Stark's question all about the national standard, 
you cited other areas, both banking, financing, cable, telecom, 
as good examples for where those should be kind of road maps 
going forward. I think broadband you also mentioned, but in 
each of those areas, the United States is behind other 
countries both in use and technology development.
    Now, originally, I actually leaned toward setting some kind 
of boundaries from the National Government standard and then 
letting the private sector develop the technology and use that 
investment eventually then to kick in where we really kind of 
have one national system.
    I do worry, where Congressman Stark is, that without 
stronger national standards, we will end up with a series of 
different silos and what you won't get is the benefit of a 
single national standard, which has its problems and drawbacks. 
In every area where we set some standards and then let each of 
the private sector companies, individual companies develop a 
program, I just--you used the analogy. I didn't. I happen to 
think medical records and information are slightly different 
than your ATM machine, but we will use that analogy. It is your 
analogy, but in broadband, cable, ATM, financial records, in 
every place, both U.S. citizens' use of that information and 
capacity to use that information and do more things with that 
information is way behind all our competitors. Since that is 
your analogy and, therefore, it is your mind-set. My instinct 
is to lean where you are, but I will tell you, you look at 
broadband, we are behind almost all our economic competitors 
and falling behind because of an approach that has not been a 
universal standard.
    You look at financial information, which we should have 
been the leader of in using electronic transfer of information, 
we actually have fallen behind our major competitors in Europe. 
Then telephones, I think that information is well available and 
out in the public domain.
    So, my concern with that analogy and that mind-set and, 
therefore, that practice is in every one of those examples we 
do not lead. We are way down in the pack, and not even near 
close to the top.
    So, between, as you try to find--and I really--when we 
first discussed this in private as just a Subcommittee, without 
any hearings, and we were in the room across the hall, my 
instinct is to lean toward setting some standards and then let 
each of the companies and each of the ones kind of get the best 
practices out there, but what happens when you set that in play 
is exactly where we are in telecom, exactly where we are in 
broadband, exactly where we are in financial services--and you 
used cable--also cable. We are behind every major 
industrialized country.
    So, if that is what we are going to do, let's just do it 
eyes opening that we decided to finish close to the back of the 
pack. We are looking the only place in the medical field where 
you can find--whether it is 150, 300 billion dollars of free 
money with a little investment. The bang for the buck is like 
nowhere else, outside of maybe preventative care.
    I did not mean to kind of rant, but it is 3 o'clock and I 
got nothing else to do for the rest of the day, so there goes. 
I would be interested in you spending a little more time on 
this because this is the--we can deal with privacy. We will 
figure that out hopefully. This, though, is the crux of whether 
we walk literally by $300 billion--maybe $150 billion. 
Somewhere in that zone. Nobody really knows. It is a guess.
    This is the issue, and in every one of your analogies, we 
are back in the bottom of the pack, where we used to be in the 
front because we followed that approach.
    I would say one last thing. I kind of leaned where you 
were. I was firmly on the other side. Save me.
    Dr. BRAILER. I am going to encourage you to keep leaning. 
The question of standards is one of a trade-off, and the 
finesse of this trade-off is something that is really at the 
heart of your question. It is the degree to which homogeneity 
is enforced, with strict, exacting measure versus the degree of 
innovation and experimentation and evolution that is born in 
    The U.S. health care industry is at the extreme side of 
innovation. That is why we have 32 standards organizations that 
have conflicting and overlapping standards, and the disarray we 
have in our standards fabric in the United States for health 
information is quite large. We have inherited this problem. It 
has been originating in the past, and I cannot comment on how 
we got here, but we certainly want to move it toward an area 
that is quite more homogeneous. However, the question is: Do we 
go all the way to the extreme to a heavy-hand imposition to say 
this is it? Because we know that the ossification and the 
sclerosis that comes around that can cause us problems in 5 or 
8 years.
    So, I cannot tell you the exact tonality, but I do 
understand the trade-off that is being made here.
    Mr. EMANUEL. Madam Chair, could I--I would only ask for 1 
minute. Okay?
    Chairman JOHNSON. Go ahead.
    Mr. EMANUEL. The trade-off is, if you say we have got a big 
foot and here is the deal, because then you have a system, 
given technology, within 10 years that is obsolete, as you 
would say, or behind the curve. In that same timeframe, without 
setting some real standards and guidelines, 10 years hence we 
are going to have so many competing demands, all the 
efficiencies that you could have gotten, i.e., the $150 to $300 
billion, is lost. I would say this: You said a template and a 
foundation of technology, and we have seen it today with the 
announcement by--just take Apple, for example, their 
announcement. You set the foundation down from a technological 
standpoint. You can always upgrade that system. You have 
massive differences out there. The integration capacity is 
never going to be financially cost-effective, and that is my 
worry. You can improve 10 years hence with a, quote-unquote, 
homogeneous, big-foot system. You cannot do that once you have 
so many competing systems that you never, ever achieve the 
economic efficiency of $300 billion in savings, 150, whatever 
the dollar is.
    Chairman JOHNSON. Let me just make----
    Mr. EMANUEL. That is the trade-off here.
    Chairman JOHNSON. Let me make a comment on this exchange, 
because I would ask you both to direct your attention in the 
coming couple of weeks during break to the last section of the 
bill where we ask the AHIC to report, because we are trying to 
in that report force some discussion of what is the entity that 
follows your office, Dr. Brailer. Even if we keep the office 
there, what is the nature of the public-private partnership 
that continues to oversee these standards and make sure that we 
get the ability for a standards change management process that 
is more appropriate and timely than we have in other sections 
of the law?
    The reason, at least in my view from being here a long 
time, the reason you were able to describe the situations you 
describe--and you are absolutely right--is because we down 
here, we make a law, then we forget it for 5 years. Then we may 
or may not do something for another 5 years, but we do not have 
a process built into anything that is organic and fast and 
timely and responsive to private sector needs.
    Dr. Gingrey has joined us to listen to the testimony 
because he has in his district some very smart, very small 
proprietary start-ups who have done wonderful boutique things. 
While we want them to have their doctors be interoperable with 
everyone else, we do not want to squelch their ingenuity 
because their ingenuity may be the next generation of national 
    So, I think we are talking about the same thing, but what 
is important about this bill, in my mind, is not that it 
establishes the office. We have to take on the challenge that 
Dr. Cohn pointed to of some kind of process that allows 
continuous upgrading management, with consensus and public 
input, but is different than the heavily regulatory, very time-
consuming processes by which we have generally operated. I 
think when Dr. Brailer's people come back from the States and 
say what are the situations here, we are going to get a pretty 
stark view--with all due respect--of the strengths and 
weaknesses of our privacy laws and their ability or inability 
to allow us to move with the times.
    So, you hit on a very key thing. Thank you for enlarging on 
it, and there are a couple of places in the bill where we are 
trying to look to the future. We may want to be more specific, 
enlarge that language, but in Dr. Brailer's testimony, the 
panel that helped to get you started, they repeatedly talk 
about the absolute necessity of--you say it here--unanimously 
agreed that the Federal Government must begin to drive change 
before the private sector will become fully engaged. The 
leadership panel identified a key imperative that the Federal 
Government should act as leader, catalyst, and convener. We 
have to maintain that interest and position of the Federal 
Government, but if we start mandating technology, then we will 
make everything obsolete in a very short period of time.
    So, we will come back to this issue, keep thinking about 
it, and as you look at the bill, we welcome your input.
    Mr. Thompson of California?
    Mr. THOMPSON. Thank you, Madam Chair.
    Dr. Brailer, some of the--I am sure not just in my 
district, and throughout the country, there are some places 
that are moving in the IT direction already and have made in 
some instances some pretty substantial investments in this 
area. They are very proactive, getting from that proverbial 
    What are we doing to make sure that they are not penalized 
for their early investment and the early work that we are 
    Dr. BRAILER. It is a very good question, and you do 
represent a district that has had some substantial innovation 
and leadership, put a substantial effort into that that we are 
now looking at to understand what the lessons are for the rest 
of the United States
    I think it is an art because we cannot guarantee those 
systems that we will preserve their investments intact such 
that we will--for example, when we do adopt standards, that we 
will not require them to change a system or change part of 
their investment. On the other hand, we certainly do not want 
to be derelict and create a wholesale switchover of what could 
be a very large and worthwhile investment.
    So, I think the two key principles that we are following 
are develop broad consensus so that people who are early 
leaders and followers, people from all stakes are able to 
represent their participation in this. Ultimately, standards 
are questions of economic determination, not technical 
determination in terms of winners and losers, and we want to 
make sure that all people are consulted; and, secondly, have 
sufficient lead time. This is one of the reasons that we have 
not pursued this as a mandate, to make sure that a system in 
your district or elsewhere who did have to make a change would 
have years or a period of time to make the change so that they 
could do it incrementally, package it in, if you would, with 
the next upgrade of their equipment that they already have.
    Even if today we mandated the industry to have standards, 
the level of investment that has already been made would take 
years, up to a decade, for it to be switched out and to be put 
into these new technologies. So, I think it is incremental and 
it is guided by these standard-setting processes.
    Mr. THOMPSON. So, there is going to be ongoing 
consideration of this and some sort of--``hold harmless'' is 
the right terminology, but an understanding of whatever comes 
along takes into consideration this early innovation.
    Dr. BRAILER. It is. Again, the core issue here, sir, is if 
the standardization of our health information was a one-time 
event, if we are able to say here it is and it is done and it 
is fixed, it would be really easy to deal with these questions. 
We could have much more degrees of freedom with systems or 
investments, but it is a process. It is never-ending. As soon 
as we think we are done, new information, new innovation, 
genetic data, remote monitoring data--whatever it might be--is 
innovated, and that creates new requirements.
    So, it is a process, and what we are trying to do is to get 
doctors and hospitals in the process so their investments are 
standardized. The key thing we are doing right now for 
ambulatory information is ambulatory electronic health records 
that don't meet the certification requirement will not gain 
access to Federal policies that we are putting forward. That 
begins pushing people in that direction in a gentle way, and it 
gives them a guideline. We are going to do that for the 
inpatient setting and for other things as we go down the road.
    Mr. THOMPSON. Because all doctors and all hospitals don't 
come in the same shapes and sizes, and especially in an area 
such as the one that I represent, there are a lot of rural 
areas, and more often than not rural folks are solo 
practitioners, and they are in a little different spot as far 
as being able to capitalize some of these new innovations. Is 
there going to be any type of--do you see any way to provide 
help for these folks?
    Dr. BRAILER. Well, yes, it is a great question, and we do 
face an adoption gap in the United States in that we have very 
large systems, like Kaiser and big physician groups, some in 
your district, who are way ahead, years ahead. Then we have 
many doctors--30 percent of doctors in practice are not able to 
gain access to this. Our efforts are aimed at three tasks: 
first, lowering the cost of these technologies, making sure 
that as doctors in small practices----
    Mr. THOMPSON. Even if you are able to lower them, though, 
it is a bigger burden on solo practitioners in rural areas than 
it is----
    Dr. BRAILER. I agree. I spent time yesterday in Texas with 
a lot of solo practitioners dealing with this very question. We 
want to take those who are willing and make sure that they can 
come along, lowering the cost, raising the economic value 
through pay for performance and other incentives, and lowering 
the risk. One of the issues that many doctors tell us is that 
they could probably understand how to do this financially, but 
it is so risky, it is such a big thing for them to do, and 
certification and other things we are doing are risk-lowerers. 
They help them take out the uncertainty of what the product is 
supposed to do.
    So, we are trying to look at this in terms of how they make 
a business decision, but ultimately, I am sure that there are 
going to be clinicians, safety net clinics, and others that 
cannot come along, and that is going to be a cause for action 
to really understand how do we make sure that this is a level 
playingfield. I don't think the time is now, but I do think 
there will come a time when we have to make sure that everyone 
is able to do this.
    Mr. THOMPSON. Thanks, Madam Chair.
    Chairman JOHNSON. That point that you raise, Mr. Thompson, 
is an extremely important one. It is not just that small 
practices of one, two, three, and four physicians, where most 
of our physicians are practicing, are going to have a hard 
time. However, in rural areas, there is going to be a 
particularly difficult time, and that is why--and I was 
discussing this earlier with Mr. Morris. That is why some of us 
advocate the exception to both the civil monetary penalties law 
and the Stark law, because I want to try to let--in the 
proposed safe harbor is just hospitals and a very limited 
number of people. If there is a big employer, if there is a 
hospital, if there is an insurer that covers people in that 
area, they have deeper pockets, and they ought to be able to 
continue, and they ought to be able to provide a very deep 
discount or for free to some of these practitioners. Equally 
important in the rural areas is going to be support for this 
technology, and we cannot have these little offices trying to 
trouble-shoot these systems that are really way beyond--we in 
the House as Members do not try to do that, and we cannot put 
them out.
    So, one of the reasons I want sort of any group who wants 
to participate in contributing to the cost of this technology 
to get in there to do that because there are systems winners in 
this, the first year. Everybody is a winner across the board, 
but it is going to so dramatically improve reporting and reduce 
costs for some groups, like insurers and hospitals, earlier 
than for others, but I want them to get into paying.
    So, that issue that you raise is a very serious one, and 
while it does not show that it is addressed in this bill, and 
while we need to talk about whether that is necessary to 
address it, I personally firmly believe it is necessary.
    I thank the panel for their patience. I thank the Members 
for letting the panel go beyond in their time to get at the 
questions that have been asked, because they have bee very good 
    I would ask you, Dr. Brailer, that as you look at the 
cross-site model and what we are going to do about that, you 
also look at this new model that the American College of 
Surgeons has developed called the ``Medical Home,'' because we 
are not suited to reimburse for that either, and yet technology 
is going to make that possible, and making that possible will 
let these rural family doctors get a level of reimbursement 
that, frankly, if we do not give to them, they will not 
survive. Also, if we do not let them have a larger mental role 
in health care, they will not want to be there.
    Mr. STARK. May I have one short----
    Chairman JOHNSON. You certainly may.
    Mr. STARK. Dr. Brailer, what would be your position on 
requiring that whatever system we use be an open-source system?
    Dr. BRAILER. We have weighed in very solidly, sir, to say 
that of the standards that are used for these systems, that 
determine how information is going in, comes out, or is stored, 
are in the public domain and are non-proprietary, non-royalties 
    Mr. STARK. So, it should be open-source.
    Dr. BRAILER. Well, open-source goes beyond that. That is a 
software development methodology that we think is one 
alternative the market could pursue as a way of generating the 
solution. You have witnesses in the next panel who will tell 
you about that, and it is a very promising approach. To us, the 
key leverage point is to have public domain standards so that 
no one controls what the methodologies of data access or data 
writing or data using are. If the market moves toward open-
source because it is a better model, more innovative, more 
cost-effective, so be it. If it leads to proprietary software, 
our view is, provided that it uses the standards and 
information is portable and cannot be sequestered or treated as 
a proprietary tool, we support it.
    Mr. STARK. Thank you.
    Chairman JOHNSON. Thank you very much. I thank the panel 
and I invite the next panel forward. While the second panel is 
assembling, I will announce that we will leave the record open 
for questions, as there are some who have indicated that they 
have questions and could not either get here in some cases on 
time and in other cases at all.
    We are welcoming Brent Henry, the Vice President and 
General Counsel of Partners HealthCare, Boston; Dr. Kenneth 
Kizer, the President and Chief Executive Officer of Medsphere; 
Joseph Smith, the Senior Vice President and Chief Information 
Officer of Arkansas Blue Cross/Blue Shield; and Gloryanne 
Bryant, the Corporate Director of Catholic Healthcare West.
    I have read your testimony, and I am really pleased to have 
you here to contribute to our discussion of this issue and to 
help us refine and strengthen our approach. With that, I will 
recognize Mr. Henry.


    Mr. HENRY. Thank you very much, Madam Chairwoman. My name 
is Brent Henry. I am Vice President and General Counsel for 
Partners HealthCare in Boston. Thank you for the opportunity to 
testify today. I am going to be speaking to the fraud and abuse 
barriers to the adoption of health IT, which I will refer to as 
health IT, in light of the limited time we have.
    Our work on this issue in Washington began well over a year 
ago, with meetings with HHS when we sought a CMS advisory 
opinion and were told to wait for regulations. We have been 
waiting for quite some time.
    We recognize that our situation is somewhat unique because 
we are leader in this area, but since we are a leader in this 
area and since we were told to wait for regulations, which have 
not been forthcoming yet and we have not been able to obtain an 
advisory opinion under the Stark laws, we are here supporting a 
legislative change which will give us some opportunity, we 
hope, to lead the way.
    Partners HealthCare is one of the largest diversified 
health care services organizations in New England. It was 
founded in 1994 by Brigham and Women's Hospital and 
Massachusetts General Hospital, and now includes three 
community hospitals, a psychiatric hospital, two rehabilitation 
hospitals, and a physician network of approximately 5,900 
primary care physicians and specialists, about half of whom are 
    We are committed to the vision of a health system that 
utilizes the promise of health IT to the fullest extent and 
have made significant investments in this area. We applaud 
Representative Johnson for introducing H.R. 4157, which would 
help remove some of the current regulatory barriers to the more 
widespread adoption of health IT.
    Partners' strategy is centered around five signature 
initiatives: one, maximizing the use of clinical IT; two, 
increasing patient safety and reducing medical errors; three, 
making high-quality patient care uniform across our system; 
four, coordinating care for patients with high-cost diseases; 
and, five, improving the efficient use of prescription drugs 
and radiology procedures.
    In pursuing these initiatives, the implementation of a 
systemwide EHR program is key. We have data that show doctors 
who use EHR score higher on both efficiency as well as quality 
measurement scales than those who do not. In Massachusetts, the 
payors have recognized this and have negotiated pay-for-
performance contracts with providers that incentivizes us to 
achieve certain efficiency and quality targets that can only be 
reached through the use of EHR and other related health IT. Our 
challenge at Partners is that while 80 percent of our employed 
physicians have access to EHR, fewer than 20 percent of our 
community-based physicians are using that technology. The 
reason is simple: Cost.
    To accomplish its goal of a network-wide EHR system, 
Partners needs to provide non-monetary support to its community 
physicians to assist them in deploying EHR technology. However, 
the fraud and abuse laws impose significant barriers on our 
ability to do that. Under the Stark law, such support would 
constitute a ``financial relationship'' with physicians who 
might possibly refer to us and would, therefore, subject us to 
significant civil monetary penalties and risk of being excluded 
from the Medicare and Medicaid programs. The anti-kickback 
statute contains criminal penalties, and there are few 
hospitals that are willing to take the risk of violating that 
statute by providing technology to physicians that could be 
considered to be ``remuneration'' without some official 
guidance or safe harbor suggesting these types of activities 
are allowed.
    We believe in strong enforcement of the fraud and abuse 
laws. They were enacted to combat the corrupting influence of 
money on physicians' decisions to refer patients and order 
services. However, these laws are having an inadvertent 
chilling effect on the widespread adoption of health IT.
    That is why we support the efforts like those in the 
Johnson bill to craft an exception and an anti-kickback safe 
harbor for the provision of health IT to health professionals 
while maintaining the basic framework of the current laws by 
stipulating that such support is not tied to referral 
    We applaud CMS and OIG for their initiatives in issuing 
proposed rules last fall in this area. However, there remain 
significant questions as to the ultimate timing and impact of 
these proposals, and we believe that legislation may still be 
necessary. The current CMS and OIG proposals offer limited 
prospects for meaningful relief, and I have submitted our 
concerns about them in detail in my written remarks. I will not 
have time to go into them now, but would be happy to answer 
questions with respect to our suggestions there. We believe 
that these proposals reflect a deeply skeptical view of 
providers' reasons for donating technology. Consequently, we 
ask Congress to act clearly to show that fraud and abuse 
protections can be harmonized with the public policy of strong 
support for the widespread adoption of health IT.
    Research has shown that having the right information 
available in the right place at the right time can dramatically 
reduce medical errors. It can improve quality, and it can 
improve efficiency in the delivery of health care. To maximize 
the value that increased use of health IT can bring to the 
health care system, it is necessary to encourage adoption by 
physicians, not just hospitals. One way Congress can facilitate 
greater physician adoption of EHR is to allow hospital systems 
like ours that have successfully implemented these systems to 
share their expertise and health IT investment with community-
based physicians.
    I thank you for the opportunity to testify today and would 
be happy to answer any questions with respect to my written 
    [The prepared statement of Mr. Henry follows:]

Statement of Brent Henry, Vice President and General Counsel, Partners 
                       HealthCare System, Boston,

    MA Good afternoon. I am Brent Henry, Vice President and General 
Counsel for Partners HealthCare in Boston. Thank you for the 
opportunity to testify today on issues regarding health information 
technology. My remarks are focused on regulatory barriers to the 
adoption of health information technology (HIT), specifically the 
physician self-referral (Stark) and anti-kickback laws and how Congress 
can spur significant progress in this area through the enactment of 
limited relief under these laws.
    Partners HealthCare is one of the largest diversified health care 
services organizations in New England. It was founded in 1994 by 
Brigham and Women's Hospital and Massachusetts General Hospital in 
order to create an integrated delivery system. In addition to the 
founding academic medical centers, the Partners system now includes 
three community acute care hospitals, one hospital providing inpatient 
and outpatient mental health services, three hospitals providing 
inpatient and outpatient services in rehabilitation medicine and a 
physician network of approximately 5,900 primary care physicians and 
specialists, about half of whom are employed.
    The dramatic positive benefits of increased efficiency, cost 
savings, and quality that can be derived from the use of cutting edge 
health information technology are well-documented. Partners is 
committed to the vision of a health system that utilizes the promise of 
that technology to the fullest extent and has made significant 
investments in this area. We applaud Rep. Johnson for introducing H.R. 
4157, ``The Health Information Technology Promotion Act'', which we 
believe would help remove current barriers to the more widespread 
adoption of health information technology.
    This technology is one of the building blocks of our efforts to 
become a truly integrated health care delivery system that improves the 
quality, safety and efficiency of care for its patients. Partners' 
strategy is based around five Signature Initiatives:

    1) maximizing the use of new clinical information technology;
    2) increasing patient safety and reducing medical errors;
    3) making high quality patient care uniform across the Partners 
    4) coordinating care for patients with high cost diseases; and
    5) improving the efficient use of prescription drugs and radiology 

    In pursuing these initiatives, the implementation of a system-wide 
electronic health records (EHR) program is key. It is the EHR that 
provides the data and the communications capabilities to make the other 
Signature Initiatives possible. To date, programs instituted under the 
Signature Initiatives have improved the quality of care for the sickest 
patients by meeting or exceeding national standards for the treatment 
of heart disease and diabetes; have reduced hospital re-admissions 
among patients with congestive heart failure by 20 percent and have 
improved coordination of care for these high-cost patients; and have 
reduced the rate of increase in outpatient drug costs. We have data 
that show doctors who use EHR score higher on both efficiency and 
quality measurement scales than those who don't. In Massachusetts, the 
payors have begun to recognize this and have negotiated ``pay for 
performance'' contracts with providers that incentivize us to achieve 
certain efficiency and quality targets that can only be achieved 
through the use of EHR and other related information technology. The 
challenge we face is that today, while close to 85% of our employed 
physicians have access to EHR, fewer than 20%of our community-based 
physicians are using that technology. The problem is simple. Cost.
    To accomplish its goal of a network-wide EHR system, Partners needs 
to provide non-monetary support to its community physicians to assist 
them in deploying EHR technology. However, the fraud and abuse laws 
impose significant legal barriers to our ability to support the non-
employed physicians in this way. Under the Stark law, such support 
would constitute a ``financial relationship'' with physicians who might 
possibly refer to us, and would therefore subject us to significant 
civil monetary penalties and risk of being excluded from participation 
in the Medicare and Medicaid programs. The anti-kickback statute 
contains criminal penalties, and no provider is willing to risk 
violating that statute by providing technology to physicians that could 
be considered ``remuneration'' without some official guidance or safe 
harbor suggesting these types of activities might be permissible.
    We believe in strong enforcement of the fraud and abuse laws. These 
laws were enacted to combat the corrupting influence of money on 
physicians' decisions to refer patients or order services. However, 
these laws are having an inadvertent chilling effect on the widespread 
adoption of health information technology that could have a dramatic 
positive impact on health care delivery.
    For this reason, we support efforts such as those included in the 
Johnson bill to craft a Stark law exception and an anti-kickback safe 
harbor for the provision of health information technology and related 
services to health professionals. Under the bill, non-monetary support 
for HIT would be allowed if: (1) there is no restriction on the use of 
HIT to services from the entity providing the technology; (2) there is 
no restriction on the use of the donated HIT in conjunction with other 
HIT; and (3) the support provided does not take into account the volume 
or value of referrals.
    These provisions will allow systems like Partners to move forward 
with investments in information technology by providing a clear roadmap 
for permissible assistance that can be provided in terms of hardware, 
software and related training, maintenance, and support services to 
physicians who cannot afford to make those investments on their own. At 
the same time, it would maintain the basic framework of the current 
laws by stipulating that the provision be clearly limited to support 
that is not tied to referral considerations.
    We strongly believe that the benefits derived from the increased 
adoption of HIT are enormous and can be achieved in a manner that does 
not create inappropriate incentives for physicians, their referral 
patterns, or clinical practices. Partners is committed to the goal of 
delivering high quality medical care in community settings, and 
therefore its care delivery model is based on maintaining the 
relationships that its community-based network physicians have with 
their community hospitals. Therefore, in providing support for the 
adoption of EHR technology it is integral to Partners that we do 
nothing that would negatively impact those relationships. Partners 
estimates that approximately 60 percent of the community network 
physicians targeted for EHR support, have primary affiliation 
relationships with non-Partners hospitals (71 percent for primary care 
physicians). Because so many of these physicians have primary 
affiliations with other hospitals, they will not accept an EHR system 
unless we can guarantee that it will be interoperable with those other 
hospitals' systems when they come on line.
    Some have asked why legislation is necessary given that the 
Department of Health and Human Services (HHS) has the authority to 
promulgate regulatory protections. Recently, the Center for Medicare 
and Medicaid Services (CMS) and the HHS Office of the Inspector General 
published proposed rules to create safe harbors under the Stark and 
anti-kickback statutes to remove barriers to the adoption of e-
prescribing technology and electronic health records. We applaud these 
initiatives. However, there remain significant questions as to the 
ultimate timing and impact of these proposals, and we believe that 
legislation in this area is still necessary. The current CMS and OIG 
proposals offer limited prospects for meaningful relief for the 
following reasons:

      The OIG did not propose a safe harbor but only solicited 
comments on whether one should be considered. Thus, the likelihood of 
comprehensive final regulations in the near term is very low.
      Hospitals are listed as proposed HIT donors, but that 
list does not include systems that own or manage multiple hospitals, 
nor does the list include management support organizations and 
physician hospital organizations. All of these types of entities need 
to be listed as permissible donors to attract appropriate adoption and 
development of HIT.
      Similarly, the list of potential recipients is limited to 
``hospital staff'', a designation that excludes non-medical staff 
physicians who are part of a health system's network and others who 
care for patients over a wider geography. This narrow listing of 
permissible recipients severely undermines the utility of the rules and 
thwarts Partners efforts as discussed earlier in my testimony.
      The covered technology under CMS's proposed exceptions is 
too restrictive to be of much practical value. The proposal only 
protects software and directly related training and excludes software 
interfaces, upgrades and ongoing technical maintenance and support for 
software (such as ``help desk'' support), which are integrally related 
to an effective HIT program and therefore critical to include in 
meaningful exceptions.
      The CMS regulations contain both ``pre-interoperability'' 
and ``post-interoperability'' exceptions. We support the approach taken 
in HR 4157 to require the EHR technology to meet standards once they 
have been promulgated and adopted by the Secretary, and to provide a 
transition period so that providers can bring their systems into 
conformance with the new standards.

    While HHS can certainly make changes in its final rules, we believe 
the current proposals reflect a deeply skeptical view of providers' 
reasons for donating technology. Consequently we ask Congress to act to 
clearly show that fraud and abuse protections can be harmonized with a 
public policy of strong support for the widespread adoption of HIT. 
Because of uncertainty surrounding the proposed rules and the limited 
degree of protection they afford, hospitals and physicians are taking a 
wait-and-see approach in the hopes the future will bring a better deal. 
As a result, important progress providers have made in adopting IT 
technology will stagnate.

    Research has shown that having the right information available in 
the right place at the right time can dramatically reduce medical 
errors, improve quality, and improve efficiency in care delivery. To 
maximize the value that increased use of IT can bring to the health 
care system, it is necessary to encourage adoption by physicians, not 
just hospitals. One way Congress can facilitate greater physician 
adoption of EHR is to allow hospitals and medical groups that have 
successfully implemented these systems to share their expertise and IT 
investment with community-based physicians.
    We believe the enactment of fraud and abuse protections, consistent 
with the underlying policies of those laws, will encourage adoption of 
EHR and provide immediate benefits to consumers in the form of higher 
quality and lower cost.
    I thank you for the opportunity to testify today and look forward 
to working with you and your staff on this issue.


    Chairman JOHNSON. Thank you very much, Mr. Henry.
    Dr. Kizer?


    Dr. KIZER. Thank you and good afternoon, Mrs. Johnson, Mr. 
Stark, Members of the Committee. Thank you for asking me to 
appear before you again.
    I know how much you have heard about these issues. I do not 
think I need to make the case about why we need electronic 
health records and a national health information 
infrastructure, so let me go directly to three suggestions for 
ways that the Congress might accelerate the adoption of 
electronic health records and do so at a cost substantially 
less than what has generally been talked about in the past.
    For the past 20 years, open-source software has been 
building momentum. Open-source now has established its 
viability in the commercial world, and there is a major shift 
going on around the world toward open-source software as being 
the preferred solution. While open-source software is less well 
developed in health care than for some other enterprises, a 
number of open-source solutions have appeared on the market for 
health care in recent years, and this is probably the most 
rapidly evolving area of open-source software.
    I would urge the Committee to consider making open-source 
software the first consideration in selecting software 
purchased with Federal funds, whether that be through the 
Federal agencies or through Federal funds that are used by the 
States or by individuals, including research funds.
    In my written testimony, I have gone through a number of 
the advantages of open-source software. Indeed, in this 
scenario, open-source software is viewed as a commodity. We 
give away the Code for free. Companies compete on the basis of 
how well they actually serve their customers based on that free 
software. I would encourage Congress to do the same as a number 
of States and other countries have done and legislate that 
open-source software must be first considered when Federal 
funds are used to purchase new software. If there is not an 
appropriate open-source solution, then one could purchase the 
proprietary software.
    I was interested in Mr. Emanuel's comments and questions 
when he talked about how the United States compares to other 
countries in a number of areas, and I can tell you that much of 
the rest of the world is moving as fast as they can toward 
open-source software because of its many advantages.
    The second point I would like to make is that in promoting 
development of a national health care information 
infrastructure and widespread adoption of electronic health 
records, we do not need to start at ground zero. I would urge 
the Committee to consider how it might capitalize on the 
sizable public investment that the government has already made 
in VistA, the electronic health record used by the Department 
of Veterans Affairs and increasingly by the Indian Health 
Service. A variant of VistA is also used in Department of 
Defense facilities.
    I am not going to take the time here to go into the history 
of the VA's development of this product. I would certainly 
acknowledge, as the person who implemented VistA in VA in the 
later part of the nineties, that it is not a perfect system. It 
has its flaws and limitations, however, it is markedly better 
than what most hospitals have in place today.
    It is unfortunate that this very successful product 
developed by the government with taxpayer dollars cannot be 
made more available to benefit community, rural, and public 
hospitals. It is also unfortunate that improvements in VistA 
that have been made in the private sector in the last couple of 
years cannot be fed back into the VA to benefit the government 
in its use of this product.
    To address these two issues, I would urge the Committee to 
consider redirecting a portion--5 percent perhaps--of the funds 
that are annually appropriated to the VA for research and 
development of VistA, and specifically those development funds, 
for a 5-year period to create a public-private partnership 
whose purpose would be to promote the use of VistA by 
supporting open-source development of the VistA code, bi-
directional sharing of enhancements, the development of 
interfaces with proprietary systems (especially the legacy back 
office systems that most hospitals want to keep in service) 
standards of interoperability where those might be needed, and 
validation of those improvements so that this public domain 
product can benefit both the government and private health care 
    I would expect that at the end of 5 years, the partnership 
would be self-sufficient, and so would no longer need these 
funds. By that time, also, the VA itself should be realizing 
substantial benefits from the enhancements in the system that 
have been fed back to it. The investment should more than pay 
for itself in the short term.
    I should acknowledge that in my written testimony, I refer 
to this Committee as authorizing this budgetary change, but I 
am aware that there is a separate VA Appropriations Committee 
and that these are issues that would need to be dealt with by 
the relevant VA Committees. In that vein, I have made copies of 
my testimony and comments available to the relevant VA 
    The third recommendation I would posit for your 
consideration--and in doing this I should state for the record 
that I did not know, Mr. Stark, of your position in this 
regard, but I would urge the Congress to set a date certain 
after which use of an electronic health record would be a 
condition of participation in the Medicare Program, and anyone 
who wishes to participate in Medicare would have to use an EHR. 
I also recognize, having run a large health care system, that 
you do not do these things overnight. There is a need for some 
advance lead time. So, if we were to pick a date-- say 2015, 
just for purposes of discussion--I would also encourage the 
corollary consideration that at some time before 2015 the 
Congress also consider setting a differential reimbursement 
rate under Medicare for those facilities that use an EHR. They 
would receive one rate, and those who did not would receive a 
lesser rate. As we saw a couple of years ago in the reporting 
of quality metrics, when Congress said that reporting would be 
associated with getting the annual Medicare adjustment, there 
was a marked change in hospital reporting in a matter of weeks.
    I think that if the Congress were to do that, it would also 
need to specify certain elements of what would qualify as an 
electronic health record. I can see from the clock that I have 
exhausted my time, so I will not take the time to further 
detail the things that are included in my written testimony as 
examples of the elements that would need to be included to 
qualify under this provision as an electronic health record.
    With that, I will stop and I will be happy to address your 
questions at the appropriate time.
    [The prepared statement of Dr. Kizer follows:]

  Statement of Kenneth W. Kizer, M.D., President and Chief Executive 
        Officer, Medsphere Systems Corporation, Aliso Viejo, CA

    Good afternoon. I am pleased to appear before you today to comment 
on how Congress might accelerate development of a national health care 
information infrastructure and speed up adoption of electronic health 
records and to do so at a substantially lower cost than generally 
thought to be necessary.
    At the outset, I should acknowledge that I am cognizant of the 
large amount of testimony that this Committee has heard over the past 
two years about health care information technology and ways to improve 
the quality and safety of health care. I know that I have contributed 
testimony on at least two previous occasions (March 15, 2005 and June 
17, 2004). Being mindful of this, my background comments are 
intentionally very brief.
    In the way of background, I would again note that few technological 
advances have held so much potential to improve health care, yet has so 
far realized so little actual impact on everyday patient care, as has 
electronic information management. This is especially ironic when one 
considers that modern health care is the most information-intense 
enterprise that human beings have ever engaged in and that many of 
health care's diagnostic and treatment technologies are models of 
electronic sophistication. Unfortunately, the methods of maintaining 
and moving patient-related information along the continuum of care have 
remained much the same for the past 100 years.
    The absence of a national health care information infrastructure to 
support coordinated, continuous and comprehensive, patient-centered 
health care contributes to an unacceptably high rate of medical errors; 
hinders efforts to measure health care performance and improve known 
deficiencies of quality; and impedes improvements in efficiency.
    I believe that the single most important thing that can be done 
today to improve the quality and safety of health care and to reduce 
soaring health care costs is to widely adopt electronic health records.
    An electronic health record (EHR) should be viewed for hospitals, 
clinics and other health care organizations the way that enterprise 
resource planning (ERP) systems are used in other industries. In brief, 
the electronic health record is a mission critical enabler of 
consistent and predictable high performance.
    Unfortunately, the high cost of most of the electronic health 
records on the market today make them unaffordable for a large majority 
of hospitals and other health care providers.
    Being mindful of your deep immersion in these issues, I will forego 
any further comments on why a national health care information 
infrastructure is needed and what are the benefits of widespread 
adoption of electronic health records. I know that you are familiar 
with the reasons why we need to proceed towards these goals with a 
sense of urgency.
    I would like to focus the remainder of my comments on three 
interrelated but stand-alone recommendations for how Congress could 
accelerate adoption of electronic health records at a cost 
substantially less than usually cited in this regard.

Make Selection of Open Source Software the Default Mode for Federal 
    For the past twenty years open source software has been building 
momentum in the technical cultures that built the Internet and the 
World Wide Web. Open source has now established its viability in the 
commercial sector, and a major shift toward open source software is 
underway throughout the world.
    Open source software is less well developed in health care than for 
some other enterprises, but open source software solutions for health 
care are now rapidly evolving.
    In this vein, I urge the Committee to consider making open source 
software the first consideration in selecting any new software 
purchased with federal funds. This should be the case across the 
federal government--for health care and non-health care federal 
procurement alike. This requirement should apply to software purchases 
made by all federal agencies and purchases made by state and local 
governments and private parties using federal funds (including research 
    Even in the absence of federal funding per se, I believe that the 
federal government's policy should be to support and utilize open 
source software as the preferred option whenever possible because of 
its many advantages over proprietary software.
    When using the term open source software I refer to software that 
is nonproprietary, available at no or minimal cost, allows different IT 
systems to operate compatibly, and facilitates collaboration in order 
to improve and enhance the freely accessible source code.
    Open source software had its genesis in the 1970s with the creation 
of Berkeley Software Distribution, which sought an alternative to 
AT&T's Unix operating system. In the 1980s and 1990s the key network 
protocols underlying the Internet were developed using open source 
methods.\1\ A particularly critical milestone in the history of open 
source was the creation of the Linux operating system in the 1990s. 
Linux demonstrated that open source development methodologies could 
deliver commercially viable technology to the market.
    \1\ Forrester Research. Open Source Software: A Primer for Health 
Care Leaders. California Healthcare Foundation. Oakland, California. 
    In recent years, a number of non-health care companies (e.g., Red 
Hat, MySQL, and JBoss) have demonstrated that open source is not only 
commercially viable but may well become the dominant model for creating 
software. This likelihood is enhanced by the support shown for open 
source by leading technology companies such as IBM, Hewlett Packard, 
Dell, Sun Microsystems and Intel.
    Open source software differs from proprietary software in several 
ways. For example, while competition and the free market are very much 
a part of open source, the competition occurs at increasingly higher 
levels of value add. Businesses in the open source arena do not derive 
revenue from licensing fees, as is the case with proprietary software, 
but instead generate revenue from ancillary products and services that 
are tailored to the needs of the individual customer. Companies 
compete, and differentiate themselves, on the quality of their value 
add, whether that be in service delivery, product enhancements or other 
ways important to the customer, and not on the proprietary value of the 
software itself.
    In open source, the basic software is viewed as a commodity and its 
development is collaborative and shared by the community of users. 
Because contributions to enhancing the code come from many sources in 
an environment of collaboration, innovation is more rapid. Likewise, 
because of the large number of ready testers, evaluation and debugging 
of new developments is more rapid than with conventional software. 
Finally, open source gives users of the software much more flexibility 
because they can obtain software and services from many sources, not 
just one vendor. Indeed, open source is much more consistent with a 
true free market approach than proprietary products that entail the 
infamous ``vendor lock.''
    The health care industry is just now being introduced to this wave 
of open source innovation, with several new corporate entrants over the 
last year promising competitive EHS functionality at significant cost 
    I recommend Congress do as some states and other countries have 
done and legislate that open source software must be first considered 
when federal funds are used to purchase new software. If there is no 
appropriate open source solution available, then one could turn to 
proprietary options.
    I am confidant that the federal government would save billions of 
dollars in licensing fees alone over the next 10 years by 
preferentially pursuing open source solutions. The government would 
likely also realize substantial savings through collaborative public-
private projects and increased software functionality while harnessing 
a robust stream of innovation in the future.
Leverage the Federal Government's Existing Investment in Health Care IT
    In promoting the development of a national health care information 
infrastructure, we need not start at ground zero. The Congress should 
recognize that it has already invested billions of dollars in 
developing an electronic health record that currently operates the 
largest health care system in the nation.
    I urge the Committee to consider how it might capitalize on the 
sizeable public investment that already has been made in VistA, the 
electronic health record used by the Department of Veterans Affairs and 
increasingly also by the Indian Health Service. A variant of VistA is 
also used by Department of Defense health care facilities.
    The Veterans Health Administration began developing an EHR in the 
early 1980s when few clinical options were commercially available. Over 
the ensuing years, several billion dollars of federal funds were spent 
developing the VA's electronic health record, which was named VistA in 
    Today, VistA is the most widely used electronic health record in 
the world, as judged by the number of facilities and health care 
providers using it on a daily basis. It is also the most successful 
electronic health record in so far as its use has been linked to 
dramatic improvements in the quality and safety of care, as documented 
in numerous peer-reviewed articles and other reports in the medical 
    In the past two years, VistA has been successfully deployed in both 
the private sector and in health care facilities run by state 
    As the person who implemented VistA in the VA in the 1990s, I will 
certainly concede that VistA is not perfect and would benefit from 
improvement in some areas, just as would all of the proprietary systems 
currently available. However, even with its limitations, VistA is 
markedly better than what exists in most hospitals today.
    It is unfortunate that this successful product developed by the 
government with taxpayer dollars cannot be made more available to 
benefit community, rural and public hospitals. It is also unfortunate 
that improvements in VistA that have been made in the private sector in 
the past two years cannot be given back to benefit the VA.
    To address these two issues, I urge the Committee to consider 
redirecting 5% of the funds annually appropriated to the VA for 
research and development of VistA for 5 years to create a public-
private partnership whose purpose would be to promote the use of VistA 
by supporting the open source development of the VistA code, bi-
directional sharing of enhancements, interfaces with proprietary 
systems (especially legacy back office systems), standards of 
interoperability where needed, and validation of improvements so that 
this public domain product could benefit both government and private 
health care providers.
    At the end of 5 years, the partnership should be expected to be 
self-sufficient. Even before that time VA should be able to realize 
substantial benefits from improvements to VistA that should obviate 
much of its need for software development funds to support VistA. This 
should result in much lower IT funding needs for the VA on an ongoing 
    This relatively small initial investment should result in marked 
savings in the long term for VA and IHS.
    Given the large number of physicians and other health care 
professionals already familiar with VistA as a result of their training 
at VA facilities, the large number of current VA and IHS users of 
VistA, and the nascent commercial community of VistA users, this 
public-private partnership could provide the formal structure needed to 
catalyze widespread adoption of an electronic health record.
    Under this scenario, instead of VA being the sole developer of the 
VistA code, as is now the case, it would become a contributor to the 
code among a community of public and private users. In this scenario, 
everyone in the community would be collaborating and contributing to 
improving and enhancing the VistA code. This arrangement, as an open 
source project, would enable the VA to leverage its budget, increase 
collaboration with private sector adopters, and enable a community of 
users to coordinate their efforts around a common platform. In brief, 
everyone would benefit under this scenario.
    This public-private partnership might be envisioned to function 
like the Eclipse Foundation currently does in advancing ``the creation, 
evolution, promotion and support of the Eclipse Platform and to 
cultivate both an open source community and an ecosystem of 
complementary products, capabilities, and services.''\2\ Eclipse is a 
software platform that IBM released into open source in 2004. Other 
conceptually similar open source collaborative models exist, including 
the highly successful Apache, Mozilla, OpenOffice and MySQL projects.
    \2\ Eclipse Foundation Bylaws. www.eclipse.org
Make use of an EHR a Condition of Participation for Medicare
    As was seen with hospital reporting on quality metrics a couple 
years ago, participation in the Medicare program, and even very small 
changes in Medicare payment rates, can serve as a powerful catalyst to 
change health care provider behavior.
    In this vein, I urge Congress to set a date after which use of an 
electronic health record will be a condition of participation for 
health care providers who wish to participate in the Medicare program. 
Recognizing the need for an adequate lead time before such a 
requirement went into effect, I would suggest a two phase process.
    To be generous, the year 2015 could be set as the year when use of 
an EHR would become a Medicare condition of participation. However, to 
encourage more rapid adoption of electronic health records, beginning 
at an earlier date--say 2011--providers not using an EHR would receive 
an incrementally lower Medicare payment rate than those who used an 
EHR. Each year until 2015, the difference in rates would increase.
      If such an approach were taken, then Congress would also need to 
specify what would qualify as an electronic health record. Without 
getting into elaborate detail here, I would suggest that the core set 
of attributes necessary to qualify as an EHR include the following:

    1. Have functionality across the continuum of care;
    2. Be scalable across the continuum of care;
    3. Have integrated applications that all access a common data base;
    4. Have a comprehensive suite of application functionality;
    5. Incorporates standards of coding and interoperability;
    6. Is platform (i.e., hardware and operating system) neutral;
    7. Has a demonstrated ability to improve quality, safety and 
efficiency; and
    8. Incorporates the national consensus standards for healthcare 
performance measurement endorsed by the National Quality Forum.

    The basic attributes of an integrated electronic health record 
listed above would no doubt be the subject of considerable debate, and 
I would urge the Committee to keep them at this general level of 
specificity--specific enough so that they are meaningful but not so 
specific that they are prescriptive or anti-competitive.

    Madam Chairwoman, as a final comment this afternoon I would again 
note that I believe the single most important thing that can be done to 
improve the quality and safety of health care today, and to 
concomitantly constrain the inexorable rise of health care costs, is to 
widely implement affordable electronic health records. However, the 
piece of the health care IT solution that has not been previously 
adequately considered is open source software.
    I believe that the future of health care IT lies in open source 
solutions, and Congress could do several things, as noted above, to 
promote the development and adoption of these highly cost-effective 
alternatives to the currently available proprietary products.
    That concludes my testimony. I would be pleased to answer any 
questions that the Committee might have.


    Chairman JOHNSON. Thank you, Dr. Kizer, and I do appreciate 
the specificity of your testimony. That is very helpful to us.
    Mr. Smith?


    Mr. SMITH. Madam Chairman and Members of the Subcommittee, 
thank you very much for the opportunity to testify here today. 
I am Joseph Smith, Senior Vice President and Chief Information 
Officer for Arkansas Blue Cross and Blue Shield. I am here on 
behalf of the Blue Cross/Blue Shield Association. I will cover 
three overall points: first, I would like to highlight how Blue 
Cross and Blue Shield Plans are advancing health information 
technologies in their communities across America; secondly, I 
would like to express support for many key dimensions of H.R. 
4157; and, finally, to explain what I think is absolutely 
critical, that more time be allowed to switch to ICD-10.
    With respect to the Blue Cross/Blue Shield Plans, there is 
a wide variety of initiatives underway to advance health IT 
across the country because we believe in health IT's tremendous 
potential to improve the quality of service and reduce costs. 
While my formal statement describes many Blue Cross Plans' 
initiatives, I will focus only on my Plan's implementation of 
one of the Nation's first statewide health information 
    I am proud to say that while many are now talking about 
creating an interoperable health information system, we in 
Arkansas have actually done it and have had important 
information to share. In 1995, Arkansas Blue Cross and Blue 
Shield partnered with two major Arkansas hospitals and IBM to 
create an interoperable network to exchange administrative, 
financial, and clinical information, with the objective of 
empowering providers with information at the point-of-service. 
We also worked with many providers to deploy electronic health 
records and continue to do so.
    This system went live in 1998 and is serving providers well 
today, although some portions of the clinical functionality had 
to be discontinued in 2002 due to the lack of provider funding. 
Our experience in this statewide information exchange provides 
valuable lessons that we could all use in creating similar 
systems elsewhere in America.
    Secondly, the Blue Cross Plans support key provisions in 
the health IT bill, H.R. 4157. We strongly support establishing 
interoperability standards through a public and private 
collaborative process. The lack of standards was the biggest 
single challenge we faced in creating the interoperable system 
in Arkansas.
    Thirdly, while we support much of H.R. 4157, we strongly 
urge the Committee to modify the legislation to allow 3 
additional years to switch to ICD-10, with the implementation 
beginning no sooner than October 2010 and final completion 
2012. Extra time is absolutely critical because of the 
extensive work required for providers and payors, including 
CMS, to implement ICD-10.
    First, the major consolidation of Medicare administrative 
contractors from 50 down to 15 contractors, the largest single 
contracting change in Medicare history, must be completed 
before the contractors can begin on the transition to ICD-10. 
This is a massive consolidation targeted for completion in 2009 
and has by itself the potential for major provider and 
beneficiary payment delays and inaccurate payments. Laying on 
another huge system change on top of that, in our opinion, 
would be an unacceptable risk to the Medicare Program.
    Secondly, before implementation of ICD-10 can begin, the 
industry must move first to the new HIPAA 5010 transactions 
because the HIPAA 4010A does not accommodate it. Upgrading this 
is a hugely complex job involving some 850 categories of 
    Thirdly, physicians and other providers will need time to 
understand and prepare for the major changes in their practices 
that will be called for by the ICD-10. Unless these physicians 
have the support systems in place to perform real-time coding 
while the patient is still in the office, they will not be able 
to achieve the benefits from the greater specificity of ICD-10. 
It is for these reasons and others outlined in my formal 
statement that we urge the Committee to set a more realistic 
timeframe to switch to ICD-10. This change is essential if we 
are to avoid major payment delays that could affect 
beneficiaries and providers, widespread inaccurate payments, 
and increased fraud and abuse potential in both government and 
private health care programs.
    Thank you very much for the opportunity.
    [The prepared statement of Mr. Smith follows:]

Statement of Joseph Smith, Senior Vice President and Chief Information 
       Officer, Arkansas Blue Cross Blue Shield, Little Rock, AR

    Good afternoon. My name is Joseph Smith, and I am Senior Vice 
President and Chief Information Officer of Arkansas Blue Cross and Blue 
Shield (ABCBS). I am speaking on behalf of the Blue Cross and Blue 
Shield Association (BCBSA), which is made up of 38 independent, locally 
operated Blue Cross and Blue Shield companies that collectively provide 
healthcare coverage for 94 million--nearly one-in-three--Americans.
    On behalf of the Blue Cross and Blue Shield Association, I would 
like to thank you for the opportunity to testify on progress currently 
being made through BCBS Plans' efforts to increase adoption of health 
IT, and on areas where specific legislative changes may be required.
    Blue Cross and Blue Shield Plans are committed to a health care 
system that delivers safe, efficient, and high-quality care for 
consumers--giving consumers greater value for their health care 
dollars--as well as increased administrative efficiency for providers, 
payers, government, and consumers. Achieving this goal requires 
nationwide adoption of health information technology (IT) that is based 
on interoperability standards that support the exchange of clinical and 
administrative information among providers, payers, government, and 
consumers, and that includes the tools providers need to deliver high-
quality, evidence-based health care.
    My testimony will focus on three areas:

    I. Our efforts to increase adoption of health IT, such as Arkansas 
BCBS's initiative to promote statewide health information exchange, the 
Advanced Health Information Network (AHIN).
    II. Our support for the provisions in H.R. 4157 to develop, 
approve, certify, and inspect standards for electronic health 
information, and to move towards a single set of national standards to 
preserve and protect the security and confidentiality of personal 
health information.
    III. Our recommendation for a realistic timetable to switch from 
the ICD-9 code set to ICD-10. The October 2009 compliance date in H.R. 
4157 is not workable. We fear it would lead to payment delays and 
inaccurate payments in both Medicare and in private health care 

I. Blue Cross and Blue Shield Plain Initiatives to Increase Health IT
    To further the goal of health IT adoption, BCBS Plans are generally 
carrying out four basic, often interrelated strategies. Plans are:

      Helping physicians adopt and use new technologies such as 
electronic prescribing (e-Rx).
      Creating payer-based electronic health records (EHRs) for 
      Empowering consumers with Personal Health Records (PHRs).
      Partnering with other stakeholders to enable the 
statewide exchange of information, and in the process creating a 
clinical interoperability normalization process.

Helping Providers Adopt New Technologies
    Many BCBS Plans are helping providers adopt technology, 
particularly in the area of electronic prescribing. Electronic 
prescribing, or e-Rx, promises to improve patient safety and save 
money, in part by boosting use of generics and compliance with 
formularies. Some estimates claim that nationwide adoption of e-Rx 
could eliminate as many as 2.1 million, or close to one-fourth, of the 
annual adverse drug events per year.
    Typically, Plans help providers in one of two ways. First, some 
offer incentives to use electronic prescribing tools, such as giving 
physicians $250 to enroll and sign contracts with one of a list of 
approved e-prescribing system vendors and another $250 if a six-month 
review shows they are doing at least some e-prescribing. Second, some 
offer electronic prescribing tools directly, such as providing handheld 
electronic prescribing technology (hardware and software) to high-
prescribing physicians.
    I would note that virtually all Plan efforts to help providers 
acquire technology could be inadvertently threatened by the way the new 
safe harbor is constructed under H.R. 4157--I will elaborate on this 
concern later in the testimony.

Creating Payer-Based Electronic Health Records for Physicians
    Several BCBS Plans have developed a payer-based electronic health 
record (EHR), a record compiled from claims data submitted by providers 
to health plans: diagnoses, procedures, medication history, lab 
history, lab results, etc. What makes payer-based EHRs particularly 
exciting is that health plans are generally the only stakeholder in the 
health care system that collects information from almost all providers 
that their members visit and, therefore, the only stakeholder that can 
give a physician a cross-provider view of a patient's history.
    The utility of payer-based EHRs has been vividly illustrated in the 
states affected by last year's devastating hurricanes. By mining their 
large bases of electronic data--continually gathered through care 
management programs and claims payments over time--the Plans in the 
affected states were able to create payer-based health records for all 
the members who were affected by Hurricanes Katrina and Rita. This 
record chronicled a patient's comprehensive health plan record, 
including every medical treatment, lab test, medication and related 
service that had been paid for by the individual's Plan.

Empowering consumers with Personal Health Records (PHRs)
    The Personal Health Record (PHR) is a set of tools that will allow 
consumers to access their electronic health information and to make 
certain information available to caregivers. Nearly all Plans are 
responding to increased interest among employers and consumers in a PHR 
capability that enhances consumers' ability to make decisions. Most 
development efforts have focused on a consumer-centric model with 
member control of PHR content and access to information by other 
parties (e.g. provider, Plan).
    The need for PHRs was especially compelling in the aftermath of 
Hurricane Katrina. BCBS LA saw PHRs as a way to help the more than 
250,000 of its members who were displaced, many of whom did not have 
access to their medical histories. Drawing from claims-based 
information, the Plan created an easy-to-understand summary of the 
patient's health conditions combined with treatments associated with 
these conditions. Members could call the Plan's Customer Service Call 
Center to request their claims-based health records. After verifying 
the member's identification, the Plan would e-mail, fax, or mail the 
record to the member. Members will soon be able to access the 
information via secure portals on the Plan's website.

Enabling Statewide Health Information Exchange
    With a local presence in each and every state, BCBS Plans are 
keenly interested in promoting interoperability among key stakeholders. 
Arkansas BCBS exemplifies this interest, having developed what we 
believe is one of the nation's first, fully-operating statewide health 
information exchange, the Advanced Health Information Network (AHIN).
Background on AHIN
    In 1995, an Arkansas-based consortium undertook the creation of one 
of the nation's first provider and payer interoperable networks to 
include administrative, financial, and clinical information, with the 
objective of empowering health care professionals with information at 
the point of service. The Advanced Health Information Network (AHIN) 
was built by a partnership of Arkansas BCBS, two of Arkansas's major 
hospitals (St. Bernards and St. Michaels) and the IBM Corporation in 
accordance with a set of guiding principles. Key among these principles 
were the following;

      The patient/member is the epicenter of the architecture 
in that all actions revolve around individual members or patients.
      A global as opposed to an organizational view of the 
health care industry.
      Leverage existing IT investments wherever possible.
      Provide options for integration wherever possible.
      Create a virtual secured view of the member/patient 
record via a Master Patient Index.
      Build upon industry standards, primarily ANSI and HL7.
      Create open systems that would not be burdened by only 
one tool or vendor.
      While designed for Arkansas, architect the system for 
portability so that it could be used anywhere.

    In addition to creating and deploying AHIN with our partners, 
Arkansas BCBS has worked with providers since 1996 in deploying 
Electronic Health Record (EHR) systems to connect with AHIN in order to 
facilitate interoperability. To date, more than 1,000 EHR licenses have 
been deployed, primarily in larger clinics. In addition, we have 
recently successfully piloted a wireless EHR for smaller rural 
physician settings at a price point sought by AHIN's strategic vision.
    The AHIN is built on a distributed architecture model. The 
foundation for the system is a Master Patient Index (MPI) which 
contains what we call Global Member Data. Global Member Data are not 
composed of the actual records relating to specific patients but 
descriptions of the type of data and pointers to where the data 
actually reside. Linking all of the data about a specific patient 
together is a Universal Patient Identifier (UPI). The architecture of 
the system includes a Central Hub where the MPI resides.
    A great deal of effort went into making this system as secure as 
technology would allow. In addition, because of state privacy laws, it 
was necessary to suppress certain types of clinical information such as 
mental health treatment or data relating to sexually transmitted 
diseases. A combination of special protocols and processes, effective 
firewalls, intrusion detection systems, careful management of passwords 
and usage auditing offers a highly secure environment.
    The system moved from concept to ``beta'' operation in 1998, and 
then continued in operation intact for more than two years in two 
regions of Arkansas. While the system worked very effectively, in 2002 
portions of the clinical system functionality were discontinued due to 
a lack of provider funding. However, the remainder of the system was 
retained and expanded and today AHIN serves virtually all providers in 
the state of Arkansas with administrative and financially-related 

Lessons Learned from AHIN
    Arkansas BCBS's experience with the AHIN imparts some valuable 
lessons learned for other communities that are considering a health 
information exchange network:

      Normalizing exchanged clinical data is the biggest single 
challenge--it takes considerable and continuous effort to take data 
elements from several organizations and put them into one common data 
dictionary to normalize the data across all stakeholders. This 
challenge underscores the importance of accelerating standards, as I 
will discuss below.
      All interacting stakeholders must be at the table--
developing a shared vision, and a set of strategic guiding principles, 
is essential to helping overcome the invariable rough patches.
      A global member index/ID is ``required'' to link 
interoperable records--patient identification and matching of data from 
disparate systems is an integral part of what the AHIN does. We found 
that while Patient Matching Algorithms generally work very well for 
patient identification, they can be vulnerable to errors when data 
changes, as it often does (such as last name changing as the result of 
marriage or divorce). This has taught us that without some sort of 
static identifier which can be used internally, identifying a specific 
individual with a probabilistic algorithm is much less a sure thing.
      EHR deployments need to be carefully integrated into 
providers' practice settings--if physicians believe that an EHR 
deployment is disruptive to their daily workflows, then health IT 
adoption will be severely limited.
      Finally, common, non-proprietary standards are 
essential--efforts such as the AHIN will be facilitated by established 
industry standards for data formats, content, and transmission 
protocols. These standards cannot be proprietary. Allowing various 
vendors to either dictate their preferred/proprietary data formats or 
protocols, or to become intermediaries or clearinghouses would hold 
other stakeholders hostage.

II.  BCBSA Support for Provisions in H.R. 4157
    Legislative changes included in H.R. 4157 will go far to help 
efforts like the Advanced Health Information Network. Lack of 
interoperability standards to enable physicians, hospitals, and payers 
to exchange clinical information has been a major barrier to wider 
health IT adoption.
    We strongly support establishing interoperability standards through 
a public-private collaborative process. The bill's requirement that the 
government, to the maximum extent possible, contract with or recognize 
private entities in developing, approving, certifying, and inspecting 
health IT standards is an appropriate position in our market-driven 

Uniform Privacy Standards
    We also share H.R. 4157's concern about the effects of varying 
state and federal privacy laws on the ability to exchange personal 
health information securely and confidentially in a national health 
information network. Without Congressional action, medical providers 
attempting to work together through interoperable health information 
technology systems would be subject to a confusing maze of state laws, 
rules, and regulations. H.R. 4157 offers an appropriate solution to 
this issue by allowing a state law study to be conducted first to 
determine the best way to achieve uniformity. If Congress fails to act 
upon the recommendations produced from the study, then HHS is charged 
with developing a uniform rule based on HIPAA. Importantly, these 
provisions provide a course of action and ensure that a national 
standard will be achieved.

Safe Harbors
    While we appreciate the need to address the current federal anti-
kickback/anti-fraud statutes, we are concerned (as mentioned earlier) 
that the new exception/safe harbor in H.R. 4157 could inadvertently 
have a chilling effect on health plans' current programs to help 
providers acquire electronic prescribing capability.
    The problem is that H.R. 4157 only gives protection to non-monetary 
remuneration that is made without taking into account the volume or 
value of referrals (or other business generated) by the physician to 
the entity. However, BCBS Plans' programs to help physicians health IT 
such as e-Rx commonly target physicians on the basis of volume (number 
of prescriptions written or the cost of the drugs prescribed). By 
taking into account volume and value, Plans have the most impact on 
improving physician practices and improving services provided to the 
greatest number of health plan members. Prohibiting health plans from 
considering, for example, the volume and value of prescriptions that 
are paid for by the health plan would detract from the widely shared 
goal of promoting electronic prescribing.
    We believe that the usual concerns about taking the volume or value 
of business generated between two parties do not apply to health plans. 
Unlike other entities covered by the safe harbor, health plans are 
designed and have every financial incentive to control utilization 
costs to compete effectively. The incentives of health plans and of the 
government are aligned by the contractual arrangements to promote gains 
in efficiency and quality, and to control fraud and abuse.
    Therefore, we would recommend amending H.R. 4157 so that the 
volume-based criterion not apply to health plans when they help 
providers adopt electronic prescribing capability and other health IT.

III.  A Realistic Timetable to Switch to ICD-10
    H.R. 4157 calls for switching from the current ICD-9 code set for 
diagnoses and hospital inpatient procedures to the more granular and 
precise ICD-10 code set by no later than October 2009. This timeframe 
is not workable
    We urge the Committee to extend the compliance date by three years, 
with implementation beginning in 2010, and final compliance in 2012. 
Three additional years are needed because:

      It would be hugely risky to implement ICD-10 at the same 
time that CMS is conducting the largest contracting change in 
Medicare's history, the consolidation of Medicare administrative 
contractors from 50 to 15 contractors.
      Industry must first upgrade all ten HIPAA transactions 
from the current 4010 version--which cannot handle ICD-10--to a new 
5010 version. At the same time, the government must create, and 
industry must analyze and refine, backward and forward electronic 
crosswalks between ICD-9 and ICD-10.
      Physicians and other health care professionals will need 
adequate time to understand and prepare for the major change in their 
practice that will be called for by ICD-10.
      All stakeholders will need to participate in and learn 
from a pilot before rolling out a nationwide implementation.

    The transition from ICD-9 to ICD-10 will be a massive undertaking. 
Provider and payer systems must be completely redesigned to handle 
hundreds of thousands of new codes at an estimated cost of up to $14 
billion. Providers process and store diagnosis and procedure codes in 
virtually every one of their computer systems, many of which are linked 
to share information. Payers use diagnosis and procedure codes not only 
to process claims, but also to design benefit packages, construct fee 
schedules, operate disease management and quality improvement programs, 
make medical necessity determinations, and prevent fraud and abuse. 
Three additional years is essential to avoid costly mistakes and 
disruptions in claims payments.

Medicare Contractor Reform
    To meet an ICD-10 compliance date of October 1, 2009, payers would 
have to start implementing ICD-10 in 2007. However, over the same 
period, CMS is conducting the largest fee-for-service contracting 
change since Medicare's inception: more than 50 fiscal intermediary and 
carrier contracts will transition to 15 Part A/B Medicare 
Administrative Contractors (MACs).
    Contractor reform is currently fraught with risk because of the 
volume and complexity of claims workload transitions. The MAC 
transitions will be more complex than past contractor transitions 
because both Part A and Part B workloads will be transferred from 
multiple contractors to a single MAC in a new jurisdiction.
    In an August 2005 report, the General Accountability Office (GAO) 
raised concern that CMS has not developed an approach that fully 
integrates the planning and scheduling of Medicare contracting reform 
with other initiatives that will affect Medicare contractors, 
beneficiaries, and providers over the next several years, such as the 
Medicare prescription drug benefit, the expanded Medicare Advantage 
program, and several major systems upgrades or replacements--not 
including ICD-10.
    This massive consolidation, involving more than 1 billion Medicare 
claims, by itself has the potential for major provider and beneficiary 
payment delays and inaccurate payments. Attempting complex transitions 
of almost all of the claims administration workload in less than 2 
years, in conjunction with changes in the data centers and financial 
management systems (not including ICD-10), significantly increases the 
risk that providers' claims will be paid improperly or not be paid at 
all. Layering another huge systems change on top of consolidation would 
raise risks exponentially.

HIPPA Maddated Transaction
    Before anyone can switch to ICD-10, industry must upgrade all ten 
HIPAA transactions to a new version (version 5010) because the current 
version (4010) will not work with ICD-10. This is a major upgrade (a 
``re-architecture of the HIPAA standards). Industry needs version 5010 
not only to handle ICD-10 codes, but also because the current 
transaction standards are increasingly out of date. The 4010 version 
standards were developed in 1998, and the implementation guides that 
were initially adopted for HIPAA were written in 2000. Over the last 8 
years, the Accredited Standards Committee X12 has made numerous changes 
to the original transaction standards that have not yet been made 
available to the industry via adoption under HIPAA.
    The implementation guides for version 5010 are not yet available. 
At an NCVHS hearing this week, the Chair of X12, the standard-setting 
organization responsible for version 5010, released an estimated 
schedule for the version 5010 implementation guides (also known as 
Technical Report 3's)--as an estimate, all the dates are subject to 
change as the implementation guides go through their reviews with the 
public and technical committees at X12. The dates in the chart below 
represent when X12 anticipates submitting a change request to the 
Designated Standard Maintenance Organization (DSMO).

                 Transaction                       Date of Submission
 1. Remittance                                 May 2006
 2. Professional claim                          June 2006
 3. Institutional claim
 4. Dental claim
 5. Services review
 6. Plan enrollment                            September 2006
 7. Plan premium payment
 8. Claim status inquiry/response
 9. Eligibility inquiry                        December 2006
10. Eligibility response

    Source: Statement of the DSMO to NCVHS, April 4, 2006.

    It will take approximately four to five months from that date--
under the timeframes allowed by the DSMO Memorandum of Understanding--
before the National Committee on Vital and Health Statistics (NCVHS) is 
contacted with a finalized change request. Thus, even before the 
rulemaking process begins with its notice and comment period, payers, 
providers, and vendors will have to wait until May or June of 2007 for 
the complete set of version 5010 implementation guides.
    H.R. 4157 seeks to accelerate the process of implementing version 
5010 by waiving the notice and comment period. While we agree that the 
process for adopting HIPAA standards needs to be streamlined, we think 
it is essential that CMS keep the notice and comment process.
    The notice and comment process is industry's primary opportunity to 
raise business issues that have broad policy implications. To take 
claims attachments as an example: the SDO might focus on the business 
requirements around a specific interaction between trading partners 
such as an unsolicited claim attachment; but CMS would focus on the 
larger issue of whether or not to allow unsolicited claims attachments. 
Only the agency's comment and review process gives industry the 
opportunity to consider the proposed mandate from an enterprise or 
industry-wide perspective. We believe that global perspective review is 
essential for the industry and we strongly believe that global review 
opportunity must be preserved under any revised system for HIPAA 
    Whatever the date that the 5010 version is approved for all ten 
HIPAA transactions, it will take industry the full two years allowed 
under HIPAA because the changes from the current version are 
voluminous--more than 850 individual changes--and complex. Users will 
have to analyze each change's potential impact on the systems that 
generate required data for transactions; the systems that create the 
standards transactions; the systems that convert standard transactions 
to internal formats; internal processing systems, and business 
    During the time that industry is implementing a new architecture 
for the HIPAA transactions, it would not be feasible to convert to the 
more complex ICD-10 coding scheme.
    One reason is that the administrative overhead associated with an 
overlapping implementation would be enormous. During the transition to 
version 5010, payers and providers will each need to operate dual 
processing systems: one to process 4010 transactions for day-to-day 
operations, and one to process 5010 transactions for analysis and 
testing purposes. If the transition to ICD-10 overlaps with the 
transition to version 5010, payers and providers will need to operate 
triple operating systems: one to process 4010 transactions, one to 
process 5010 transactions with ICD-9, and one to process 5010 
transactions with ICD-10.
    Another reason is that an overlapping implementation would violate 
a basic tenet of systems design: implement and test one major systems 
change at a time. It is critical that the version 5010 transaction 
standards are stable before payers and providers begin analyzing and 
testing other significant changes. If version 5010 and ICD-10 
implementations were to overlap, and testing revealed problems in any 
of the dozens of internal systems and applications affected by 5010 and 
ICD-10, it would be extremely difficult to determine the source of the 
problem: preparation/implementation of 5010, or preparation/
implementation of ICD-10. The operational problems that 5010 was 
designed to correct will be unnecessarily prolonged if payers and 
providers are forced simultaneously to implement ICD-10.
    Keep in mind that upgrading to version 5010 is not the only HIPAA-
mandated activity occurring over the next couple of years. Payers and 
providers are currently working hard to implement the national provider 
identifier--a massive effort to assign a unique code to every provider 
for all health plan transactions--by May 2007. Other major, costly 
HIPAA mandates on the horizon include standardized transactions for six 
types of electronic claims attachments, and the national payer 
identifier, all of which would require the same staff resources as 
would be required to implememt ICD-10.

    During the transition--and perhaps for some time after--both payers 
and providers will need backward and forward electronic crosswalks 
between ICD-10-CM and ICD-9-CM diagnosis codes, and between ICD-10-PCS 
and ICD-9-CM procedure codes. Backwards crosswalks (from ICD-10 to ICD-
9) will help payers and providers bootstrap themselves into the new 
codes, permitting users to schedule major systems changes in an orderly 
sequence. Forward crosswalks (from ICD-9 to ICD-10) are indispensable 
for creating links between historical ICD-9 data--such as a clinical 
work flow process maintained by a provider, or a payer's time series of 
claims data used to build fraud and abuse edits--and new ICD-10 data.
    Currently, backward and forward crosswalks are available only for 
ICD-9/10 procedure codes, not for ICD-9/10 diagnosis codes. In fact, 
the final ICD-10-CM code set is itself not yet available. All that is 
available on the website of the National Center for Health Statistics 
(NCHS) is the 2003 pre-release version of ICD-10 diagnosis codes. NCHS 
is hoping to issue a final version of ICD-10-CM by the end of the 
fiscal year, but even then crosswalks may not be ready.
    Building crosswalks between ICD-9 and ICD-10 is but a first step. 
As other countries using ICD-10 have learned, mapping is an inherently 
imperfect science in that most relationships involve one to many 
mappings, and forward and backward mappings may not synchronize. 
Indeed, the forward (ICD-9 to ICD-10) crosswalk recently published by 
CMS underscores the ambiguity inherent in a one-to-many crosswalk: 
``The map [ICD-9 to ICD-10] contains possible options from which the 
appropriate ICD-10-PCS code can be chosen, depending on the use to 
which the map is put.''
    For example, CMS maps the ICD-9 code for the procedure ``Infusion 
of recombinant protein'' (00.11) to 12 potential ICD-10 procedure codes 
where the infusion of recombinant protein varies depending on the mode 
of infusion (open or percutaneous) and on the site of infusion (central 
vein, peripheral artery, central artery, coronary artery, heart). In 
practice, it would be impossible for a provider or payer to map 
longitudinal data on 00.11 to ICD-10 codes with any certainty.
    This ambiguity is why the Rand Corporation recommended giving 
serious thought to having a major provider code diagnoses and 
procedures in both ICD-9-CM and ICD-10-CM/ICD-10-PCS to determine which 
codes are interpreted similarly. Rand noted that this process would 
help to develop a crosswalk between ICD-9-CM and ICD-10-CM/ICD-10-PCS 
in practice as well as in theory [emphasis added]. It would also help 
analysts who work with time series interpret before-and-after changes 
in health statistics. This is where pilot testing could play a vital 
role: to help translate theoretical crosswalks into practical 

Preparing Physicians and Other Health Professionals
    H.R. 4157 does not call for replacing CPT codes, which Medicare and 
other payers use to reimburse physicians' services. Nonetheless, all 
providers will be impacted by H.R. 4157 because all claims for 
reimbursement--outpatient as well as inpatient--must include ICD 
diagnosis codes.
    The ICD-10-CM diagnosis code set is much more complex than ICD-9-
CM: ICD-10-CM has 120,000 unique codes, almost ten times as many as 
ICD-9-CM. The accuracy of codes for diagnoses (as well as for 
procedures) will depend on the precision and specificity of physician 
documentation. Poor physician documentation will prevent reaping any 
benefits from the greater specificity of ICD-10-CM.
    The slide attached at the end of the testimony illustrates the 
adjustments physicians will have to make in how they code. Today, 
doctors just indicate one code for asphyxiation. Under ICD-10, they 
will need to determine precisely which of the nearly 40 codes created 
for asphyxiation best describe the case at hand. This demonstrates that 
physicians will need software literally on their desk to go through the 
decision tree necessary to identify the correct coding. They cannot 
simply enter words into a computer program; they will need to know the 
specifics of the appropriate code.
    Therefore, physicians and other providers will need adequate time 
to understand and prepare for the major change in their practice that 
will be called for by ICD-10. They will need time to acquire and become 
proficient with technology needed to sort through and triage the 
numerous decisions necessary to code properly so they can be paid 
accurately and timely. The transition to ICD-10 will impact every 
physician, every day, at virtually every encounter, requiring that they 
capture additional data they may not even think they need to capture 
    Physician and other provider readiness for effective use of ICD-10 
cannot be underestimated. Unless physicians have the support systems in 
place to perform real time coding, while the patient is in the office, 
and the commitment to spend the time needed to discern among the 
greatly expanded choice of similar--but more granular--codes, the 
investment of billions of dollars will not produce the much anticipated 
information (e.g., to improve quality). If physicians are not prepared, 
through use of technology, to support the process of identifying the 
more refined codes, they may resort to using ``default'' codes, 
providing no more specificity than under ICD-9.

Pilot Testing
    Adequate pilot testing is crucial to ensure the new system works, 
providers are educated, and claims will be paid.
    A key lesson from HIPAA is the importance of pilot testing to avoid 
costly mistakes and assure smooth implementation. The final HIPAA rule 
called for full compliance with these electronic transactions and code 
sets standards by October 16, 2002. However, Congress decided to extend 
this deadline for one-year, to October 16, 2003, in part because of 
serious delays arising from glitches in the standards--glitches that 
might have been discovered and fixed ahead of time with a pilot. As the 
2003 date neared, CMS realized that many providers would still not be 
in compliance, and so CMS authorized Medicare and private payers on a 
``contingency basis'' to continue accepting HIPAA non-compliant claims 
as well as compliant claims. CMS only ended contingency operations for 
Medicare last October, and three years after the original deadline some 
private payers are still running contingency operations.
    We believe that pilot testing ICD-10 would provide an analysis of 
the implementation issues facing health plans and providers, including 
validity of ICD-9/ICD-10 crosswalks, outreach/training, claim 
adjudication system integration, clinical-administrative system 
integration, and workflow/process adaptations. The pilot would assess 
the impact on claims payments, including a comparison to transactions 
handled with ICD-9, and document any early benefits of the coding 
system. The pilot would help to prepare payers and providers for 
implementation, give CMS an opportunity to fix problems in training, 
education, crosswalks, etc., before nationwide implementation.
    The pilot test we envision would involve a Medicare contractor, 
three or four hospitals representing a distribution of size and 
clinical activity, two large physician group practices, and a number of 
smaller physician practices. If CMS were to begin planning today, a 
pilot could be up and running in the period from 2007 to 2008, leaving 
sufficient time for an independent evaluator to compile data, conduct 
comparative analyses, develop lessons learned, and report findings that 
would inform the later rulemaking process. Indeed, we believe that 
starting a notice and comment period before a pilot would be 
counterproductive because industry would be offering comments in the 
abstract. Far better to have actual facts and lessons learned from a 
pilot for industry to respond to in comments to CMS.

    In conclusion, we believe that widespread use of health IT can save 
lives, improve quality, and increase efficiency. BCBS Plans are doing 
their part to increase health IT adoption: helping providers adopt 
health IT; giving providers access to comprehensive information in 
payer-based EHRs; developing tools to help consumers manage their own 
care better through PHRs; and developing statewide health information 
exchange networks.
    We wholeheartedly endorse Congressional action that would help 
private sector efforts to increase health IT adoption. For that reason, 
we endorse the provisions in H.R. 4157 to develop, approve, certify, 
and inspect standards for electronic health information, and to move 
towards a single set of national standards to preserve and protect the 
security and confidentiality of personal health information. However, 
we urge you to adopt a realistic timetable to switch from ICD-9 code to 
ICD-10, with a final compliance date no sooner than 2012.


    Chairman JOHNSON. Thank you, Mr. Smith.
    Ms. Bryant?


    Ms. BRYANT. Thank you. Chairman Johnson, Congressman Stark, 
and Members of the Subcommittee on Health, good afternoon. I am 
Gloryanne Bryant, Corporate Director of Coding and Health 
Information Management Compliance with Catholic Healthcare 
West. We are based in San Francisco.
    I am here today to urge you to quickly move forward with 
legislation introduced by Chairman Johnson, the Health 
Information Technology Promotion Act, so our health care 
industry can make use of the best possible disease and 
procedure classification systems as soon as possible.
    I have been involved in coding and the management of coded 
data for over 27 years now, and I want to share with you my 
knowledge, expertise, and vision with my testimony.
    Since 1993, when NCVHS declared our United States disease 
and procedure classification system, ICD-9-CM, ``broken,'' my 
interest and involvement have been intense. I have provided 
input in the replacement of the class system, tested ICD-10, 
tested the training of coders with ICD-10, developed a 
planning, implementation, and training project overview of ICD-
10 for my health care system, which has led me to multiple 
lectures on this issue. The following are some key points I 
want to share.
    ICD-9 is broken and obsolete. ICD-10 is needed to improve 
the quality of health information. Specificity equates to 
precision, not complexity. ICD-10 is needed to support the 
electronic health record and the national health information 
network. Action has to now not been where we could receive the 
benefits of improved data. This will not be achieved in our 
lifetime, possibly, or the end of this decade unless we move 
    ICD-10 classifications are necessary for quality care 
monitoring, pay for performance, and other areas of health care 
accountability. Both ICD-10-CM and ICD-10-PCS have been 
maintained since they were originated. The update for ICD-10-
PCS was recently announced in the Federal Register. The update 
to ICD-10-CM is due in June. The mapping between ICD-9 and ICD-
10-CM will also be forthcoming shortly from the Center for 
Disease Control/National Center for Health Statistics.
    It is difficult to measure quality of care or provider 
performance in addressing the risk factors and effectively 
treating a patient's condition if the relevant diagnostic and 
procedural code information includes multiple conditions. For 
example, if two conditions with different treatment protocols 
are assigned to the same code, which occurs with ICD-9, how 
will we evaluate the provider's performance in treating one of 
these two conditions? Capturing severity can also be an issue. 
If all we know is that a patient has a decubitus ulcer and not 
whether it includes the skin or extends down to the bone, we 
are not able to measure the effectiveness of wound care 
management programs or the cost of treating that decubitus 
ulcer. It is obviously more difficult and expensive to treat a 
deep ulcer than a superficial one. Clinical data specificity 
like that in ICD-10 can provide the window to quality and 
performance. I have details examples of diabetes and similar 
non-Hodgkin's lymphoma examples in my written testimony.
    ICD-9 codes are too general, ambiguous, and not reflective 
of modern medicine. ICD-10 improves the situation by expanding 
the Codes that are used as part of the quality indicators and 
are for medical complications and medical safety issues. The 
specificity in ICD-10 allows for the improved capture of 
information used for quality measures, pay for performance, and 
to assess the effectiveness of medical error prevention 
    It is important to note that medical specialists helped to 
create the specificity that exists in ICD-10 to capture the 
necessary data for performance measures and evidence-based 
medicine protocols. Medical necessity and infections are two 
other areas of health care that is of interest to the 
Subcommittee. This is further explained in my written 
testimony, along with the impact on research, trauma registry, 
fraud and abuse, and personal health records.
    This is a small world. Daily we hear reports of outbreaks, 
avian flu and the potential for pandemic outbreaks. Currently, 
the United States would have difficulty with tracking and 
monitoring pandemic outbreaks of disease or infection for a 
range of reasons, one of which is the lack of specific coded 
clinical data. Does the United States have a diagnostic code 
for avian flu? Does the World Health Organization have such a 
code? Yes, with ICD-10.
    Does the United States have codes for West Nile virus, 
SARS, and potential bioterrorism, as with anthrax? We now do, 
but we did not have them at the time of these events. It took 
the United States a significant amount of time to develop the 
necessary codes.
    So, why is the United States behind? The United States is 
not on the same ICD-based system with most of the world, 
including most other industrial nations. They have converted to 
ICD-10 while we continue to linger and plod along with a system 
that was designed and was implemented back in the seventies and 
is no longer supported by the World Health Organization.
    I see a day with my health organization where we can send a 
claim and have it quickly and accurately processed because the 
information needed is all contained within the ICD-10 codes. 
Additionally, the claim information can be confidently used for 
pay for performance, quality, and injury monitoring. I see a 
day when public health and researchers can share data 
internationally in the form of ICD-10-based codes for tracking 
and monitoring for public health and bioterrorism events.
    We are not using the same electronic tools and devices that 
we bought 10 years ago, let alone 20 years ago, with our health 
care data system. It is amazing to me that some of us feel 
comfortable using the same 30-year-old data system. I cannot 
stress enough the need to upgrade ICD-10 by 2009. We have the 
most technologically advanced health care system in the world, 
but it is handicapped by this archaic process with procedures 
of updating versions of a classification system. We would not 
do this to Bill Gates and Microsoft. Why do we do this to 
health care and slow us down? We need to make progress.
    I congratulate Chairman Johnson and the Subcommittee for 
providing leadership on this issue, and I would be pleased to 
answer any questions that you might have or point to my 
professional association, the American Health Information 
Management Association, for responses also.
    [The prepared statement of Ms. Bryant follows:]

Statement of Gloryanne Bryant, Director, Catholic Healthcare West, San 
                             Francisco, CA

    Chairman Johnson, Congressman Stark, members of the Health 
Subcommittee, ladies and gentlemen, good afternoon. I am Gloryanne 
Bryant, corporate director for coding and Health Information Management 
(HIM) compliance with Catholic Healthcare West (CHW). I speak to you 
today not only from my position at CHW, but also as one of 50,000 
health information management professionals throughout the country and 
industry who are interested in quality information for quality 
    I am here today to urge you to move forward with legislation 
introduced by Chairman Johnson, HR 4157, the ``Health Information 
Technology Promotion Act.'' Specifically, I am here to ask you all to 
support HR 4157 and ensure this bill is acted upon with deliberate 
speed so our healthcare industry can make use of the best possible 
disease and procedure classification systems as soon as possible.
    I have been involved in the coding and management of coding of 
healthcare data for over 27 years. Since 1993, when the National 
Committee on Vital and Health Statistics (NCVHS) declared our U.S. 
disease and procedure classification system the International 
Classification of Diseases, Version 9, Clinical Modification (ICD-9-CM) 
``broken,'' I have been involved with several of the groups that 
provided input for the replacement of this classification system.
    In the late 1990s, I was a tester of the ICD-10-PCS (procedure 
coding system), the classification system anointed to replace the 
existing inpatient procedure codes in ICD-9-CM. It was a successful 
test and the ICD-10-PCS system has been maintained and ready to go 
since that time.
    In recent years, I have been involved with the testing of the ICD-
10-CM (ICD-10-CM) classification system for diagnoses. This testing not 
only proved the accuracy of the classification system, it also showed 
how simple the training for ICD-10-CM and ICD-10-PCS could be. This 
testing was done with the American Hospital Association (AHA) and my 
professional association the American Health Information Management 
Association (AHIMA), and the test report is available on the AHIMA Web 
site. I have also participated in meetings of the ICD-9-CM Coordination 
and Maintenance Committee, which is charged with overseeing the 
existing ICD-9-CM. All this activity has given me significant insight 
on the needs, issues, and problems surrounding the upgrading of ICD-9-
    Working with ICD-9-CM on a daily basis reaffirms that it is 
outdated, broken, inefficient, and nothing but an albatross to our 
healthcare system. I strongly support upgrading ICD-9-CM to ICD-10-CM 
and ICD-10-PCS. Yes, upgrading our coding system will require change, 
but change that is not insurmountable.
    Working closely with other professionals at Catholic Healthcare 
West, I have developed a three year transition plan for CHW to use for 
the planning, implementing, and training that will need to occur with 
any upgrade. I have also educated my own staff and others about ICD-10-
CM and ICD-10-PCS, the actual use of ICD-10 classification, and the 
important issues of planning, implementation, and training. You have to 
understand that the training materials we use today will be considered 
quite crude once the go-ahead is indicated for ICD-10 classifications. 
Even so, the coders I have trained have found the ICD-10 systems easy 
to use, and it enables them to present a complete and accurate report.
The Following some key points I want to share:
      ICD-9-CM is obsolete and the new version, ICD-10, is 
ready for implementation.
      ICD-10-CM and ICD-10-PCS, the ICD-9 upgrades, are needed 
to improve the quality of health information. Specificity equates to 
precision, not complexity.
      ICD-10 is needed to support interoperable electronic 
health records (EHRs) and a nationwide health information network 
      Action has to occur now so that we can receive the 
benefits of this improved data by the end of this decade.

    It is my intention to provide you with the necessary information on 
the benefits of ICD-10-CM and ICD-10-PCS to move ahead with HR 4157 so 
we can achieve the benefits these classification systems provide and 
better the healthcare of all individuals.

Why is ICD-10 necessary for pay-for-performance, accountability, 
        quality reporting, and more?

Quality and Pay-for-Performance
    I was asked to address why the ICD-10 classifications are necessary 
for quality of care monitoring, pay-for-performance, and other areas of 
healthcare accountability.
    Increased detail and better depiction of severity allows improved 
linkage between a provider's performance and the patient's condition 
and a better ability to measure quality. It is hard to measure quality 
of care, or a provider's performance in addressing risk factors and 
effectively treating a patient's condition, if the relevant diagnostic 
or procedural code includes multiple conditions. For example, if 2 
conditions with different treatment protocols are assigned to the same 
code, how will we evaluate the provider's performance in treating one 
of these 2 conditions? Severity can also be an issue--if all we know is 
that a patient has a decubitus ulcer, and not whether it involves skin 
only or all the way down to bone, how will we be able to measure the 
effectiveness of a wound management program--or the cost of treating 
decubitus ulcers? It is obviously much more difficult, and expensive, 
to treat a deep ulcer than a superficial one.
    Many quality measures, such as HealthGrades and AHRQ's quality 
indicators, rely on ICD-9-CM codes. If these codes are too general or 
ambiguous, or not reflective of modern medicine, it will be impossible 
to produce accurate quality reports or pay providers accurately for 
performance. Situations have already occurred whereby hospitals have 
complained about erroneous quality conclusions based on ambiguous or 
poor ICD-9-CM codes--for example, if a code includes conditions that 
have variable quality implications (i.e., some conditions don't 
indicate a quality problem and other conditions do, but both sets of 
conditions are classified to the same code, the conclusion, or 
assumption, often goes to the worst case scenario--i.e., if you can't 
distinguish which condition the patient had, assume he had the 
condition with the adverse quality implication and "ding" the 
    ICD-10-CM greatly expands the codes for medical complications and 
medical safety issues--allowing for much better capture of this 
information for use in quality measurement, P4P, and to assess the 
effectiveness of medical error prevention programs.
    Also, if there is a disconnect between the outdated classification 
of a condition in ICD-9-CM and the modern clinical classification of a 
disease process, it is difficult to relate modern treatment protocols 
and performance measures to the relevant code in ICD-9-CM (it is like 
comparing apples with oranges--current performance measures and 
evidence-based medicine protocols are linked to a diagnostic structure 
or diagnostic or procedural distinctions that do not exist in ICD-9-
    It is difficult to evaluate the outcomes of new procedures and 
emerging healthcare conditions when precise codes are lacking. For 
example, in ICD-9-CM, many procedures are not differentiated by 
approach. For basic quality measures such as mortality, rates can vary 
widely depending on the approach used.
    CMS has even acknowledged that it would be difficult to implement a 
severity-refined DRG system without ICD-10 because the inability to 
collect a finer level of detail would limit the usefulness of the DRG 
    ICD-10-CM will open new opportunities in injury research and trauma 
services evaluation. To further research in the area of prevention and 
treatment of injuries, we must be able to more accurately classify the 
nature of the injuries sustained and correlate the nature of injury 
with the mechanism of injury, treatment, and outcome. ICD-10-CM will 
provide a much-improved ability to accomplish this task. Major 
improvements relative to injury prevention and treatment include: 
addition of a 6th character that expands the flexibility of the system 
and allows for incorporation of more specific injury codes; separation 
of many previous ``multiple injury'' codes into separate codes and 
elimination of certain ``illogical'' injury codes, especially with 
regard to head injuries; incorporation of terminology commonly used by 
clinicians; inclusion of laterality code which affords the opportunity 
to identify bilateral injuries and provides an unprecedented ability to 
more accurately study patterns of injury and how they relate to the 
underlying mechanism of injury.
    The improvements in ICD-10-CM have important implications for our 
ability to rate severity of injuries. Several different classification 
systems are being used by trauma clinicians to rate severity of 
injuries for the purpose of benchmarking, quality improvement 
activities, and research. These systems require an independent review 
of the medical record, which is becoming increasingly cost-prohibitive. 
The use of ICD-10-CM as a basis for rating the severity of injuries 
would obviate the need for these alternative scaling systems.
    ICD-9-CM lacks specificity regarding the extent of injury and uses 
terminology and severity parameters that are either outdated or 
inconsistent with other widely used clinical classifications. ICD-10-CM 
would address many, if not most, of these inadequacies and bring us 
closer to a universal classification of injuries.
    While some criticize the size of the ICD-10 code sets or the number 
of codes available for use, these code sets have been expanded from 
ICD-9-CM to reflect 21st century medicine and diseases. They provide 
the detail needed if healthcare providers are to be paid fairly in the 
future. Currently, hospitals are supplying quality monitoring data. The 
only way to get knowledge from this data is to also look at the 
diagnoses codes that are included on the claim.
    This quality data is looked at against diagnoses represented with 
up to nine codes (codes are limited by Medicare in order to accommodate 
paper billing), but these are diagnoses codes first renewed (from ICD-
8-CM) 30 years ago. Since then, or should I say, since the 1970s, our 
medical knowledge represented by diagnosis, technology and procedure 
codes has expanded greatly. Interestingly enough, today's ICD-9-CM 
classification has to ignore this expansion of healthcare knowledge and 
treatment because it is running out of the codes necessary to provide 
the necessary and accurate representation.
    In ICD-9, our medical coders find that they are unable to code 
accurately because the codes available do not have the level of 
specificity that matches the information and clinical documentation in 
the health record. In these cases, the coder often has to make use of 
an ambiguous code, which is frustrating and potentially expensive. When 
the claim is submitted someone may call back asking for additional 
detail, which involves getting data from the medical record, copying 
it, and sending it out.
    Accountability is the hallmark of a medical coder. If we do not 
find the information in the record, we do not code it. Therefore, it is 
very frustrating to find the information in the record and then either 
be unable to code it, or have to use either a vague code or choose 
between any number of vague codes. In behavioral health, we are forced 
to use a ``cheat sheet'' to change record information into acceptable 
codes. Why? The codes in ICD-9-CM are so far behind the advances in 
behavioral health that we have no correct codes. Technically, we are 
not supposed to change codes, but with the blessing of CMS, it is 
something that we do or we would not get paid.
    We have so many requests for additional detail that we have had to 
hire photocopying companies and other outsourcing resources to handle 
the requests. This is common throughout the healthcare industry. In 
addition to the costs and time associated with handling these requests, 
the plans also incur costs and dedicate employee time. Why? Someone has 
to read and interpret this information. Then, and only then, is a 
payment processed. Meanwhile, besides the cost of processing the 
additional information, an organization also has a cost of carrying a 
    Many of these efforts and expenses are incurred because we do not 
have a classification system that can represent the information that is 
in the patient's record. The more that we get into sending data for 
quality monitoring or other reasons--often demanded by Congress--the 
greater this problem of equity, cost, and accuracy will be.
    The collection of quality monitoring data is not the end of the 
story as we are really just starting this process. Next in line are the 
pay-for-performance programs. In this environment, the provider is 
financially affected if there is an issue between the quality indicator 
and the actual state of the patient's health and procedures, which to 
judge correctly will mean getting the additional clinical data 
mentioned previously. Again, without the ICD-10-CM and ICD-10-PCS 
upgrades, providers are going to expend additional resources to provide 
health plans with enough data so we get paid accurately under P-4-P. If 
we cannot improve the content of our codes, we will all lose. It is a 
vicious cycle and I do not see it changing soon. Each day, more and 
more information is sought relevant to the claim, and for decades we 
have neglected to upgrade the crucial clinical information on the claim 
itself. We need to upgrade to ICD-10.
    Medical necessity and infections are two other areas of healthcare 
that I believe are of interest to this subcommittee. Under medical 
necessity, a provider has to demonstrate that there is a need for the 
patient to receive certain care. Again, we are forced to manually 
process claims to ensure that we send parts of the health records to 
prove the medical necessity. While moving to ICD-10 classifications 
will not eliminate this problem, there will be a substantial decrease 
in the need to review additional parts of the record if the claim can 
carry more detailed coding--both in the codes used and in the number of 
codes reported. This problem, which is another resource burner for many 
hospitals and physicians, could be greatly alleviated with the detail 
available in the upgrades from ICD-9-CM to ICD-10.
    In 2007, hospitals are required to begin reporting ``diagnoses 
present on admission.'' This data is to provide CMS with information 
that eventually may lead to some care not being reimbursed--situations 
where it is deemed the institution's fault that additional care was 
needed. For instance, was the infection, or other problem, present when 
the patient was admitted, or did it arise during the stay? While some 
believe that continuing to use ICD-9-CM is not a problem, it will be 
clear when conflicts arise due to coding that may or may not be 
reflective of the details involved with infections or similar issues 
that arise. If we cannot implement a more contemporary classification 
system until 2009, it might perhaps be better for Congress delay this 
requirement until ICD-9-CM is upgraded.
    I have repeatedly mentioned using medical records to make up for 
missing or vague codes. This problem is also becoming more prevalent in 
the area of medical procedures and technology. A few years ago, 
Congress asked CMS to ensure it is keeping up with new technology. 
Again we are running out of codes in the area of inpatient technology 
and procedures. So, we are merging technologies into essentially group 
codes, and then, to get proper reimbursement, we are sending additional 
``attachment'' detail to the claims adjudicator.
    It has been suggested by some that there are plenty of codes left 
to describe new technology and procedures. When citing the number of 
codes, these same critics fail to mention that once we run out of 
sequenced codes, the ICD-9-CM Coordination and Maintenance Committee 
will have to assign codes in other chapters (associated with body 
systems). This will essentially eliminate the ability to monitor such 
data by computer.
    I can mention other areas where the detail in ICD-10-CM and ICD-10-
PCS could greatly improve healthcare and its administration by CMS and 
others. It is important to recognize that the depth of clinical data 
continues to drive major healthcare decisions, for payers, researchers, 
regulators and Congress.
    I know there is an expectation by some that once we have a standard 
electronic health record (EHR), we will not need to have such a 
classification system. However, this suggestion ignores the fact that 
the detail in the EHR will be too granular to be used for all the 
secondary purposes that require providers to submit data to the 
government, health plans and others. Classifications, or the codes that 
make up the classification system, provide this data and make it usable 
for a variety of purposes that a copy of the record, paper or 
electronic, just cannot do. Until we have a good classification system 
implemented, the value of the EHR development will not be experienced 
by the patient or the population.

Fraud ans Abuse
    I mentioned ambiguous codes. Using ICD-9-CM, coders often have to 
make choices in codes they assign because there may not be an accurate 
code for the diagnosis or procedure that is reflected in the record. It 
is almost like the story of the lady and the tiger. If you make the 
wrong choice, the tiger--be it the health plan, the Medicare carrier, 
or the Department of Health and Human Services (HHS) Office of the 
Inspector General (OIG)--comes out and accuses you of fraud. Some 
believe more detailed coding system will increase fraud, but I believe 
exactly the opposite will happen. When we have codes that can actually 
match the 21st century data in the medical record then we will not have 
to choose the lady or the tiger. The code needed to reflect the data 
present will become much easier to ascertain. In fact, ICD-10-CM was 
designed to eventually allow for what we call ``computer assisted 
coding,'' where the computer itself does the coding from the detail in 
the electronic record and the coder becomes more of an editor, 
validator, or monitor of the system.
    Last summer, the AHIMA Foundation of Research and Education (FORE) 
undertook a fraud study for the Office of the National Coordinator for 
Health Information Technology (ONC) and the HHS OIG. The oversight 
committee was made up of fraud experts from health plans, providers, 
healthcare associations, and government including the Department of 
Justice and the HHS Inspector General's office. Among its ``guiding 
principles'' and recommendations the reports called for ``standardized 
reference terminology and up to date classification systems that 
facilitate the automation of clinical coding are essential to the 
adoption of interoperable EHRs and the associated IT enabled healthcare 
fraud management programs.'' The reports from this study (``Report on 
the Use of Health Information Technology to Enhance and Expand Health 
Care Anti-Fraud Activities'' and ``Automated Coding Software: 
Development and Use to Enhance Anti-Fraud Activities'') are posted on 
both the Office of the National Coordinator's Web Site and the AHIMA/
FORE Web Site.

PHRs and Claims Data
    In recent months we have also seen a significant increase in the 
importance of consumers having a personal health record (PHR). 
Educating consumers on the value of using a PHR is a high priority in 
my profession, and we welcome providers, health plans, and others who 
are looking to improve healthcare through the use of PHRs. However, 
even as we move to provide this data to our patients/consumers, another 
emerging trend is to build or sponsor PHRs that take their clinical 
data from the claim forms--namely, the ICD-9-CM and other 
classifications (CPT in ambulatory claims) data.
    I and many others in health information management and medical 
informatics are deeply concerned about this trend for all the reasons I 
have cited--the vagueness and limitations of today's claims data. If we 
begin to populate these PHRs with claims data based in ICD-9 and do not 
warn the owner and users of the limitations, we could have significant 
negative impact on the owner of the personal health records. In 
addition to the limitations of the ICD-9-CM coding system, the ICD-9-CM 
codes on claims are truncated, as noted, at 9 codes. This means the 
information is not only potentially vague, but also may not reflect 
clinical information that is important but has been truncated in the 
claims process. In addition, codes on claims often reflect coding that 
has been altered to meet the health plan or payers reimbursement 
instructions. Personally, I believe that it is unsafe to develop these 
PHRs without:

      Diagnostic and procedure detail that can only be provided 
in a contemporary classification;
      Industry agreement for consistency in coding so codes are 
not changed for reimbursement purposes; or
      A clear statement that the information in such records 
does not represent all the diagnoses or procedures that potentially 
were identified in any episode of care.
Example: How ICD-9-CM does not reflect modern medicine.
    I wanted to share some examples of the coding problems we are 
experiencing with regard to its reflection of modern medicine. Two that 
recently were addressed at the March 2006 ICD-9-CM Coordination and 
Maintenance Meeting included non-Hodgkin's lymphoma and secondary 
diabetes mellitus

Non-Hodgkin's Lymphoma
    There are more than 30 subtypes of non-Hodgkin's lymphoma. The 
request was to update the non-Hodgkin's lymphoma codes to allow for 
more current classification. This involves the creation of several new 
codes for specific types. Currently, ``non-Hodgkin's lymphoma'' is 
indexed to 202.8x (with the ``x'' referring to a fifth character for 
the specific site). However, there is no space for expansion in 
category 202. So, it has been proposed that category 200, which is 
currently limited to lymphosarcomas and reticulosarcomas, be expanded 
to also include several new codes for subtypes of non-Hodgkin's 
lymphoma. To maintain consistency with longitudinal data, non-Hodgkin's 
lymphoma, not further specified as to subtype, would continue to be 
classified to code 202.8x. This code includes lymphomas other than just 
non-Hodgkin's lymphoma. Due the limited codes left in the system, it is 
not being proposed that a code be created specifically for non-
Hodgkin's lymphoma not further specified as to subtype.
    So now, until we upgrade ICD-9-CM to ICD-10-CM, codes for non-
Hodgkin's lymphoma subtypes will be distributed between two entirely 
different categories, with no unique code for non-Hodgkin's lymphoma 
not specified as to subtype. This will have a serious impact on data 
retrieval and,as I noted before, coding accuracy. Non-Hodgkin's 
lymphoma codes will not be grouped together, which means data analysts 
and coders could miss identifying all the related codes. The non-
Hodgkin's lymphoma cases that are still classified to code 202.8x will 
not be able to be specifically identified as non-Hodgkin's lymphoma 
cases because this code includes other types of lymphomas as well. Data 
retrieval for lymphosarcoma and reticulosarcoma will also be affected 
because category 200 will no longer be limited to these conditions. 
This impacts not only physicians and hospitals, but also our cancer 
registries, researchers, and others. Meanwhile, ICD-10-CM has numerous 
specific codes for non-Hodgkin's lymphoma that are organized into 
appropriate categories.

Secondary Diabetes Mellitus
    The diabetes classification in ICD-9-CM is also outdated--in ICD-
10-CM, the diabetes codes reflect the American Diabetes Association's 
current clinical classification.
    In ICD-10-CM, there are distinct categories of codes for diabetes 
mellitus due to underlying conditions and drug or chemical induced 
diabetes mellitus. In ICD-9-CM, these conditions are all classified to 
code 251.8--other specified disorders of pancreatic internal secretion. 
It has been proposed that a new category of codes be created in ICD-9-
CM to capture secondary diabetes mellitus. However, in an effort to 
conserve codes, an attempt is being made to cover both diabetes 
mellitus due to an underlying condition and diabetes mellitus due to 
drugs or chemicals into a single category of codes. This will result in 
confusion and coding errors due to the differences in coding diseases 
that are due to an underlying condition and those caused by drugs. All 
the requested information is in the medical record(s), and it is much 
clearer from both a coding and data analysis perspective to distinguish 
drug-induced diseases from those caused by an underlying condition. 
However, but this cannot be done under ICD-9-CM.
    There are many examples highlighting the differences between ICD-9-
CM and the classifications originally designed in the 1990s (ICD-10-CM 
and ICD-10-PCS) and maintained for conversion that show the differences 
in detail and organization. I would invite you to contact the Centers 
for Disease Control and Prevention (CDC)-National Center for Health 
Statistics (NCHS--custodian of ICD-9-CM, volumes 1&2 and ICD-10-CM) and 
the Centers for Medicare and Medicaid Services (CMS--custodian of ICD-
9-CM volume 3, and ICD-10-PCS) for a much more detailed look at the 
differences between the two generations of classification systems. You 
can also contact the American Hospital Association (AHA) and AHIMA who 
constitute the provider and professional organizations overseeing the 
coding guidelines for ICD-9-CM.
    A few other examples where ICD-9-CM does not reflect modern 
medicine include:

     Myeloproliferative disorders and myelodysplastic 
syndrome--classified as neoplasms of uncertain behavior in ICD-9-CM, 
but now recognized as hematologic malignancies
     Many conditions are classified according to outdated 
thinking. Examples include neuromuscular disease, essential tremor, 
epilepsy, transverse myelitis, stroke.
     Alzheimer's disease codes in ICD-10-CM are more reflective 
of current medical knowledge.

Why is ICD-10 necessary to keep the U.S. in concert with the rest of 
        the world?
    It should be no surprise to the subcommittee that we live in a 
small world. In recent months, the media has reported numerous stories 
related to the avian flu outbreak and the potential for pandemic 
outbreaks in the U.S. as well. This has generated attention in 
Congress, the Administration, the states, and localities. 
Unfortunately, the U.S. would have difficulty in tracking a pandemic 
outbreak and comparing our data internationally.
    Does the U.S. have a diagnosis code for avian flu? No.
    Does the World Health Organization have such a code? Yes.
    Does the U.S. have codes for West Nile Virus, SARs, or potential 
bioterrorism? We do now, but we didn't have them at the time of the 
U.S. outbreaks or for our first anthrax incidents when they occurred.
    Why is the U.S. behind? Essentially because we are not on the same 
ICD-based system that most of the world is on, including all of the 
other industrial nations. They have converted to ICD-10 while we 
continue to linger and plod along with a system designed and 
implemented in the 1970's.
    The ICD-10 codes are different than ICD-9-CM. Instead of five 
characters in version 9, version 10 has seven, and instead of being 
only numeric in version 9, version 10-based codes are alphanumeric. So, 
when a new disease is recognized by the WHO, the U.S. has to take the 
code and figure a way to renumber it and then put it in our coding 
system. As we discussed before, some of our chapters are out of codes. 
This is not an easy task and it is getting harder all the time.
    Avian flu, SARs, and other diseases get a lot of press, but we must 
not forget that information must be transferred for research and public 
health purposes hundreds of times daily. When this exchange is between 
a U.S. public health department, the Centers for Disease and Prevention 
(CDC), or a research team and another ICD-10 country it means that 
someone must translate the codes. Because we have not moved to ICD-10 
based classifications there has not been a lot of development of 
electronic translators or maps. What does this mean in today's 
environment? It means doing this by hand.
    This problem grows because if it is ICD-10 information coming in to 
the U.S., the receiver has to map it to the vague ICD-9-CM codes. 
Obviously, some researchers choose to just work in ICD-10 and they can 
do so if they do not have to look at information contained in both 
classification systems. Yet doing business this way or using 
translators is not without a cost. I suspect the pharmaceutical 
companies, major researchers, health data organizations, and other 
healthcare companies doing business internationally can give you the 
economic impact that occurs because of these differences.
    This is a good point to note that ICD-10-CM has been restructured 
to facilitate not only computer-assisted coding, but also to work hand-
in-hand with electronic health records that will have a vocabulary 
base. The most common vocabulary is SNOMED-CT', which is the 
designated vocabulary the federal government will use. This means that 
ICD-10 has now become the base system for future versions. Future 
versions may be expanded to reduce the differences between the U.S. 
clinical modifications and the international code as well as to work to 
smooth the interrelationship with other classifications such a 
functional status codes. The longer we remain on ICD-9-CM the longer we 
can not get the benefits of this classification, which has been 
designed to work with the standard EHR that Congress, the 
Administration, and many in the industry want to see in place.

U.S. Mortality Coding
    The problem is not just between the U.S. and other countries. In 
1999, the U.S. upgraded its mortality reporting system to use ICD-10. 
This was done in part because of our international agreements (through 
the CDC's NCHS) and the need to look at mortality on an international 
basis. So today, in 2006, each of the U.S. states, district, and 
territories report mortality data monthly ICD-10 on a monthly basis. 
This leads to the question of whether we can easily look at U.S. 
mortality data versus our morbidity data. The obvious answer is no, not 
without the same mapping or conversion process that we must use for 
international data.

    Crosswalks or mapping are terms we use to describe the connections, 
or paths, between classifications and vocabularies. There are several 
needs for a mapping associated with ICD-9-CM and ICD-10-CM or ICD-10-
PCS. We have already discussed the need to map between data from the 
U.S. and other countries or between our current morbidity and mortality 
systems. Such a map is also needed for the purpose of maintaining a 
longitudinal patient record to ensure that data in ICD-9-CM and one of 
the ICD-10 classifications can be obtained for a variety of reasons 
including clinical care, research, fraud monitoring and so forth. A 
third reason for a map might be to permit a healthcare plan or payer to 
accept claims with ICD-10-CM or PCS data, but map it back to ICD-9-CM 
so that the claim can be adjudicated on an older system that was not 
    This last use is a practice used in Canada to alleviate some of the 
implementation issues during that country's conversion. It is not a 
recommended practice because when you map back from ICD-10 to ICD-9, 
you lose most of the detail I have spoken of and consequently the 
initial benefits and savings that might come from simpler claims 
administration. This is not beneficial for either the plan or the 
provider. A similar use of this process is the function of fraud 
monitoring. For fraud monitoring, a plan might carry a three-year 
rolling set of claims data in order to detect fraud. To do this would 
require a three year period where you would keep data in ICD-9-CM, but 
once the three years is completed, you would have built a 3-year 
history in ICD-10 classifications. Technically, you could also map the 
ICD-9-CM data to ICD-10. Again, these are not the optimal solutions, 
but they are feasible and they do allow for the need to work through an 
initial implementation period.
    I must indicate that both of these ICD-10 classifications have been 
maintained since they were originated. The update for ICD-10-PCS was 
just announced in the Federal Register, and the update for ICD-10-CM is 
due in June. The mapping between ICD-9-CM and ICD-10-CM will also be 
forthcoming shortly from the CDC-NCHS.
    I noted that mapping occurs between classifications and 
vocabularies and that vocabularies would serve to be the data base for 
standard electronic health records. Therefore, mapping must occur 
between ICD-10-CM and SNOMED-CT and ICD-10-PCS and SNOMED-CT. Mapping 
has been completed and verified under the National Institute for 
Health's (NIH) National Library of Medicine (NLM). At a February 2006 
meeting of the NCVHS, the NLM did announce that it is ready and waiting 
to map between the ICD-10 classifications and SNOMED-CT, but it cannot 
do so until the two classifications are officially adopted by the HHS.

Conversion Costs
    The question of conversion costs often arises as we discuss the 
upgrading of ICD-9-CM. In 2003 the NCVHS asked this question of the 
Rand Corporation and through Rand's report was told that costs for the 
U.S. (in 2003) were in the range of $425 million to $1.1 billion. Rand 
also noted that the anticipated benefits would be between $700 million 
and $7.7 million because of all the advantages of detailed 
information--many that I have mentioned before.
    Significant losses in coding productivity and accuracy are 
resulting from the use of ICD-9-CM terminology that is not consistent 
with current medical practice. For example, coding professionals must 
often consult physicians for clarification regarding the appropriate 
code. Time is wasted when coding professionals have to try to determine 
the ``best'' code when none of the options seems appropriate. Often, 
the wrong code is selected due to the inability to determine the best 
ambiguous code or conflicts between ICD-9-CM terminology and 
terminology used in the record. Many of the coding questions that arise 
stem from the ambiguity and inconsistency of ICD-9-CM and the outdated 
terminology that is not reflected in current medical record 
documentation. As the obsolescence of ICD-9-CM continues to increase, 
these problems will grow even more.
    Increased costs are also incurred due to the extended time required 
to code cases where more and more disparate conditions and procedures 
are classified to the same code.
    As long as we continue to use ICD-9-CM, the coding process will be 
heavily labor-intensive--i.e., manual coding process. The use of 
computer-assisted coding tools is limited with ICD-9-CM due to the code 
ambiguity, lack of precision, and inconsistent terminology and 
definitions. No matter how sophisticated electronic applications 
become, their use in the coding process will be limited as long as ICD-
9-CM is in use. Once ICD-10 is implemented, the use of electronic 
coding tools will grow dramatically and these applications will become 
increasingly sophisticated--greatly facilitating the coding process and 
reducing the manual labor involved.
    Essentially the systems' change created by ICD-9-CM being upgraded 
to the ICD-10 classification is one of an expanded field. The other 
change is moving this larger field from numeric to alpha-numeric. So, 
the systems that have to have the field changed, technically, are any 
software that has the ICD-9-CM code, and any electronic data base that 
contains ICD-9-CM codes. Currently, most of the systems that have 
extensive coding in software or in the data base are in hospitals, 
health plans, and reporting and research organizations. This is not to 
say that they do not exist in clinic, physician practices, and 
ancillary services. But, as you know, there is a substantial healthcare 
provider population that is still essentially paper-oriented, and even 
many of the organizations I mentioned may have only one or two systems, 
not a full EHR or administrative system. While software vendors will 
make the change to the software (and many international firms have 
experience with ICD-10), database upgrades will involve both the owners 
and vendors.
    The longer we wait to make the upgrade to ICD-9-CM, the more 
expensive such a conversion will be, if for no other reason than the 
government and healthcare industry are pushing various entities into 
purchasing electronic health programs, records, reporting mechanisms, 
and the like. We have set goals and projects, even in Congress, to get 
providers to send information electronically. Healthcare entities who 
electronically expand their systems, purchase replacement systems, and 
so forth will have to make the ICD-9-CM upgrade to ICD-10 as a 
retrofit. If you have purchased the software or are beginning to build 
the database you will have to retrofit your system. Anyone who has 
renovated a house or office knows the renovation is often more costly 
than building in the first place. The same occurs for electronic 
    The need to ``retrofit'' ICD-10-CM and ICD-10-PCS into a greater 
number of system applications, declines in coding productivity and 
accuracy due to difficulties in trying to use a failing coding system, 
and the implementation of ``band-aid'' approaches to keep ICD-9-CM 
afloat and attempt to meet healthcare data demands as much as possible. 
For example, increasingly, CMS has been forced, due to space 
constraints in the ICD-9-CM procedural coding system, to disrupt the 
hierarchical structure by starting to use available codes in unrelated 
code series, with the result being an unstructured, haphazard coding 
system. A hierarchical structure assists in defining coding concepts by 
placing them into organized, distinct groupings. Disruption of this 
hierarchical structure causes the complexity of using the system and 
mining coded data to increase dramatically and leads to declines in 
coding accuracy. Additionally, the U.S. will continue to incur the 
costs of maintaining ICD-10-CM/PCS as well as ICD-9-CM for all of the 
years between now and implementation.
    I must point out the obvious: the standards for ICD-10-CM and ICD-
10-PCS are available now. The standards for the transactions that must 
also occur, the conversion to ASC X12 Version 5010 and the NCPDP 
upgrades are also known. If products (systems and software) were built 
from this point forward that could handle both code sets, then buyers 
would not have to retrofit later. It is not unusual to buy a product 
that is ready for a future change such as the high definition 
televisions that are sold in anticipation. I understand, however, that 
vendors are reluctant to include the ICD-10 classifications in existing 
and near future products. It costs money to make such conversions in 
systems, but they have heard rumors of upgrading ICD-9-CM since the 
mid-1990s. So, why should they run the expense? The vendors want a 
formalized notification so they can move forward. At this stage, the 
notification must come from the federal government. It is important to 
express that HR 4157 explicitly addresses the notification issue by 
calling for a ``notice of intent'' to be sent out by the Secretary 
within 30 days of the passage of this provision. This is absolutely 
    Last summer, my professional association, AHIMA, issued a statement 
calling for the implementation of the ICD-10 classifications by October 
2008. After your hearing on this issue last July, it became apparent 
that such an implementation could not occur until October of 2009, and 
only if the bill is passed. Without the bill, under HIPAA, the earliest 
conversion could occur would be 2011 or 2012.
    I have already pointed out a number of examples of what happens 
when we have no codes in our diagnoses area, or if we have no 
sequential codes in the procedures area. Our data becomes more vague 
and more suspect. There will be more and more calls for additional 
information from the medical record. Quality data, injury data, all of 
this will be suspect because procedure and diagnoses codes are taken 
off the claim, and we will not have the detail to provide an ample 
picture of the patient's health without considerable manual efforts. 
Congress continues to call for better payment systems, report cards, 
and other measures of care and healthcare value, but the cost of 
providing such data with a classification system that does not 
represent 21st century medicine will increase rapidly or no data will 
be provided because providers will not have the money to provide data 
outside of the existing claims system.
    The United States is the last hold-out in the industrial world to 
convert to an ICD-10 based system. What is the cost to research as we 
go through the manual efforts I have described year after year? Perhaps 
we could use maps, but we are mapping between much greater detail from 
other countries, and a rather vague and somewhat violated system of 
codes. How long does our public health system have to hope that we have 
codes to describe and track international outbreaks? How easily will we 
be able to share biosurveillance data?
    We are currently in the midst of a massive effort to ensure 
standard electronic health records and to provide a nationwide health 
information network. Certainly our electronic records will improve 
clinical care and to rapidly transfer records across the country will 
be great. But, what about all the other data transmitted through the 
network--the secondary data? If we cannot clean up our secondary data 
by upgrading our ICD-9-CM system, then it will be like sending polluted 
water through a new pipe system.
    I see a day, in 2010, when my coders can code accurately with ICD-
10 and not have to guess at the code, or merge it into a catch-all 
code--a day when the ICD codes truly represent the information our 
clinicians have entered into the record.
    I see a day when a standard electronic health record can provide 
the initial ICD-10 coding information because of a standard map between 
its SNOMED-CT base and our ICD system, and coders will become 
validators of the process and not the process itself.
    I see a day when my organization can send a claim and have it 
processed because all the information needed is in the ICD-10 codes and 
very few claims will result in a request for more information. And, 
because this claim's information is so valuable, it can be used in 
quality and injury monitoring programs and where healthcare can be 
reimburse, on the basis of outcomes and quality.
    I see a day when public health and researchers can trade and use 
data internationally, in the form of ICD-10 based codes for monitoring 
and for instructions when an outbreak occurs.
    Few of us are using the electronic standards for personal computers 
and similar devices we bought 10 years ago, let alone 30 years ago. Why 
do some feel comfortable doing so with our data standards?
    HR 4157 calls for a review of priorities. Should the provider and 
payer identifiers be put aside to get better clinical data? We are not 
running out of identifiers at present and current identification 
numbers work in our systems. Should the potential for a HIPAA claims 
attachment that will only affect 2 percent (according to the National 
Uniform Billing Committee) of claims be delayed until we implement a 
classification system that can eliminate the need for attachments for 
many more claims?
    These are questions that must be answered, and I congratulate 
Chairman Johnson and the subcommittee for providing leadership on this 
issue. I would be pleased to answer any questions you might have and I 
also point you to my professional association, the American Health 
Information Management Association, for a response to any further 
questions. Thank you.

Gloryanne Bryant, RHIA, CCS
Corporate Director, Coding HIM Compliance
Catholic Healthcare West
San Francisco, CA 94107
American Health Information Management Association
Washington, DC 20036
Web site: www.ahima.org


    Chairman JOHNSON. Thank you very much, and I thank the 
    Ms. Bryant, it has been very interesting to me that you 
have actually implemented ICD-10, trained for ICD-10, and 
actually know quite a lot about what kind of challenge that 
will pose for a system.
    First of all, I want to ask you whether or not you think it 
is possible to pilot ICD-10, and, secondly, I want the other 
panelists to comment on why we might need to delay or why we 
might need to accelerate.
    You do in your testimony make an overwhelming case for the 
need for a better coding system as we move to an era where 
quality has to be judged and has to be associated with payment, 
whether it is hospitals, doctors, nursing homes, or anything 
else. So, the future is upon us in our need to be able to 
evaluate quality. The CASM and Institute of Medicine studies 
showed what a terrible job we are doing for lots of money. So, 
I just want to pose that question to you, and then I want to 
give Mr. Henry, Mr. Smith, and if Dr. Kizer is interested, any 
comments from them.
    You have to get closer or make sure your microphone is on. 
Did you turn it off?
    Ms. BRYANT. Thank you. To answer the first part of your 
question about beta testing or trialing this, you may recall 
there was a field test project that was done in ICD-10 by the 
American Hospital Association and the American Health 
Information Management Association, which I have available if 
anyone on the panel wants to look at it, and there was a 
testing done of ICD-10.
    I have taught coders to use this, and one of the 
interesting aspects of the teaching was the overwhelming 
response to the change. Most people are very pushback with 
change, and I have had coding professionals, 30-year-old 
individuals who have been doing this for years and years, not 
wanting change, say to me, ``This is a good system. We needed 
this years ago. Where has it been? How come we don't have it?`` 
Because the medical records do have the documentation to 
support the codes, we can provide good data across the Nation, 
and it can be used in multiple formats.
    So, I strongly support that we would be able to implement 
within a shorter period of time than some people are 
recommending, our colleagues are recommending, and we could 
roll this out within that timeframe start October of 2009.
    Chairman JOHNSON. You mentioned the 3-year timeframe.
    Ms. BRYANT. Yes.
    Chairman JOHNSON. So, you are saying the 3-year timeframe 
would start in 2009 or end in 2009?
    Ms. BRYANT. It would end in 2009. We would go live October 
of 2009.
    Chairman JOHNSON. Okay. Any comments? Mr. Smith.
    Mr. SMITH. Yes, thank you. We would encourage a broad, 
full, end-to-end pilot testing be undertaken to prove this out 
using not just the health care coding in a hospital but 
actually take it through the entire coding system of hospitals 
and physicians, through their clinical systems, through the 
practice management systems, utilizing the ANSI 5010 formats 
off to the health payors and have all that full pilot testing 
be completed before we would step into the full exposure and 
learn from those pilot testings on a true end-to-end test.
    Chairman JOHNSON. While the 5010--just to make the record 
clear, the 5010 is certainly scheduled to be implemented. The 
proposal does not involve implementing ICD-10 in the doctor's 
offices. That was JCPT code covered.
    Mr. SMITH. The physicians do have to be involved in that 
because in order for them to do their billings of their health 
care transactions, they must report a diagnosis, and that 
diagnosis would be moving to the ICD-10 format, even though 
they are still using the Current Procedural Terminology (CPT) 
and Healthcare Common Procedure Coding System for the procedure 
codings. They would have to relearn and be trained in how to 
report that diagnosis coding, and that we believe is a pretty 
significant training effort for the physicians to have to go 
through, as well as into their electronic health records and 
their practice management systems, which do not currently 
recognize the coding structure of the ICD-10.
    Chairman JOHNSON. That is true. They still do have to code, 
and one of the questions is the question Dr. Kizer raised. You 
have got to give notice if you are going to make change and how 
many changes do you need to make at once rather than making a 
big change and then a big change, and then a big change and a 
big change.
    Ms. Bryant, did you have any comment on this issue of the 
doctor's office involvement in the model that you have tried?
    Ms. BRYANT. Right, I would like to comment on that, and the 
data that was done back with American Heart Association and 
American Health Information Management Association did include 
physician office, a smaller portion of that. In addition, we 
have looked at what--a physician's office typically uses a 
billing form, uses--the terminology is called a ``super bill.'' 
It lists procedure CPT codes for the services of the visit, and 
then another part of that is the diagnosis codes. Not altering 
but adding a column to the one form of the crosswalk from a 
standard practicing physician's office, it is easily achieved 
and was done in 4 hours to put in place and be used. These are 
updated annually, as they should be from a compliance 
perspective, but it is not that time-consuming. My educational 
experience with physicians--and physician office staff is, 
again, very eager to get a better coding system. They recognize 
the frailty of ICD-9 and that it has problems.
    Chairman JOHNSON. Mr. Henry, is Partners thinking about any 
of this?
    Mr. HENRY. I have to say that Partners does not have an 
official position with respect to ICD-10. In connection with my 
coming here today, I did talk to a few of my colleagues who 
said that it is their view that, since we are eventually going 
to have to move to an ICD-10 format, probably better sooner 
than later.
    Chairman JOHNSON. Dr. Kizer?
    Dr. KIZER. Again, not taking any formal position, I would 
certainly agree with Ms. Bryant that the ICD-10 offers many 
advantages over the current system, but recognizing your 
interest in quality, there is one particular area that needs a 
solution. As you know, the National Quality Forum has achieved 
consensus on what are known as serious reportable events, 27 
egregious medical events that simply should never happen in 
health care. These have been legislated as mandatorily 
reportable in half a dozen States. Many other States are also 
considering this requirement, but ICD-10 would not allow coding 
for about half of those or more. Relatively few of them would 
be coded under ICD-10. It would be nice if one could find a 
solution to that type of problem.
    Chairman JOHNSON. That is interesting. Did you want to 
comment, Ms. Bryant?
    Ms. BRYANT. Yes, thank you. Certainly all the current 
formats with ICD-9 will have their crosswalk. Those are 
developed already. The crosswalk back from 10 to 9 is in 
process, should be out soon, but that is primarily the issue. 
The risk services community that I have worked with in 
hospitals, in my particular hospitals I trained them on ICD-9 
to capture diagnosis-related risk areas--accidents, punctures, 
that sort of thing. They are eager to see specificity in the 
data because we cannot capture it in 9 as it is now. They would 
like to see that sooner than later to save costs and save 
    Chairman JOHNSON. Thank you very much.
    Mr. Stark.
    Mr. STARK. Well, Madam Chair, this is a fascinating panel. 
If Mr. Smith, Dr. Kizer, and Mr. Henry will permit me the 
Tinker-to-Evers-to-Chance play here, we are going to wrap this 
all up.
    Mr. Smith, you said in your testimony that health plans are 
generally the only stakeholder in the health care system that 
collects information from almost all providers that their 
members visit and, therefore, the only stakeholder that can 
give a physician a cross-provider view of a patient's history. 
Do you stand by that?
    Mr. SMITH. That is a general statement, yes.
    Mr. STARK. Who is the biggest payor?
    Mr. SMITH. Medicare.
    Mr. STARK. You got it. So, we will stick with you there. 
Then--and you just led right into this. This is great. Then you 
said, finally, common, non-proprietary standards are essential, 
allowing various vendors to either dictate their preferred 
proprietary data formats or protocols or to become 
intermediaries or clearing houses would hold other stakeholders 
hostage. Right?
    Mr. SMITH. That is correct.
    Mr. STARK. You like that, Dr. Kizer? Does he just feed 
right into what you are saying?
    Dr. KIZER. That sounds interesting.
    Mr. STARK. Then I am going to solve Mr. Henry's problem. As 
Dr. Kizer just suggested, although we are going to turn it on 
its head, that we have a differential rate. If to get this all 
together--because Mr. Smith does not know it, but this 
Committee wrote the design for the way he now reimburses 
physicians, didn't we? Blue Cross came on--after we did 
physician reimbursement, most of the Blues throughout the 
country adopted it.
    If, in fact, the differential rate that you talked about 
was enough, short-term, 5, 10 years, enough for Mr. Henry's 
community to amortize the costs and the training, he will get 
enough money through--or his doctors and offices will get 
enough money to be able to participate in the system, and I 
think then your problem goes away, doesn't it, Mr. Henry?
    Mr. HENRY. Perhaps in the long term, but not in the short 
    Mr. STARK. Well, in the short term, if we pay in enough, 
assuming that we are front-loading it, because the training and 
the equipment comes up front and from then on it is more 
updating and upcoding--let me put it this way: It is possible 
to resolve your problem that way, is it not?
    Mr. HENRY. Oh, yes, I don't think----
    Mr. STARK. Eliminating then any chance of one hospital 
competing with another to buy them a fancier computer to get 
them. So, I think if what I am hearing from you all about the 
payors being the people who can basically through a 
differential rate or the ``hammer,'' if that is not a bad word, 
a differential rate for lack of participation, an open-source 
system which Dr. Kizer has so eloquently defined for us here, a 
way to pay directly to the people who are going to use the 
system, we have wrapped it all up. Okay?
    Dr. Henry, Mr. Henry, you came all the way from Boston just 
to get that resolved, and my best wishes to--is Massachusetts 
General in your----
    Mr. HENRY. Yes.
    Mr. STARK. Who is head of surgery?
    Mr. HENRY. I am sorry?
    Mr. STARK. Who is head of surgery at Massachusetts General?
    Mr. HENRY. At Massachusetts General?
    Mr. STARK. You don't remember, okay.
    Mr. HENRY. Now you are going to embarrass me.
    Mr. STARK. Thank you very much--yes, please, Mr. Smith.
    Mr. SMITH. I would like to comment. I think in terms of the 
strategy you have laid out, it is good. I think we also need to 
consider, though, a number of the other activities that are 
also in play at the same time which are contending particularly 
for resources in all three of the constituencies of the 
government, the private sector, and providers and health plans, 
and the number of the things that need to go on and to work in 
an overall aggregate game plan to do that in a logical, 
sequential fashion to make that happen. That would be the----
    Mr. STARK. My only reason for saying that, Mr. Smith, is 
that, as I said, we have had studies since 1996; we are going 
to have more studies. At some point we have got to just say, 
guys, let's do it. Then some of Mr. Henry's physicians may not 
fit in well. The Blues in Arkansas may get a little strained to 
get into a system that might be government, and we will have to 
make changes. We know that, but at least everybody is in then. 
We are in a system which we can then adjust. You had that 
problem with the Veterans Administration, didn't you, Dr. 
Kizer? You started it, and I am sure that the Livermore 
Hospital did not get a lot, the Palo Alto Hospital and----
    Dr. KIZER. That is certainly a fair statement. There are 
two things I would just raise. One is indeed when we were 
trying to make the decision on moving forward with VistA, or I 
should say when I made that decision, there was a lot of 
resistance and there was a lot of talk about, well, we cannot 
do this in the time that you have said, and there was, in that 
case, an executive decision that, effective January 1, 1996, we 
would move forward. Setting a firm timeline and then holding 
the organization to it did result in the successful 
implementation of the largest deployment of electronic record 
in the world ever.
    Mr. STARK. Well, we are counting on the chairwoman to beat 
you, and when she mandates that we get it done in a couple of 
years, we are going to go right past the VA like they were 
running backward. Okay?
    Dr. KIZER. It would be perhaps of interest--and I do not 
mean to put Ms. Bryant on the spot here, but it is my 
understanding, if I read the newspapers correctly, that 
Catholic Healthcare West has made a corporate decision to only 
go with open-source solutions, and I don't know if she might 
want to comment on that.
    Ms. BRYANT. I don't have a comment on that.
    Mr. STARK. Thanks, Madam Chair.
    Chairman JOHNSON. Thank you. I would like to note that the 
President set a timeline and said by 2010 America is going to 
have an interoperable health information system, and that is 
why we have seen so much activity. That is why we are seeing so 
many advances. That is why this bill is here, to lay the 
predicate, what has to be a part of that system in a number of 
different areas, and I just do not want that to go unnoticed.
    The other thing is, it is interesting that the Department 
of Defense did not adopt VistA. I do not have time to pursue 
that right now because I am going to yield to my colleague----
    Mr. STARK. Can I put 2010 in the bill, Madam Chair?
    Chairman JOHNSON. Pardon?
    Mr. STARK. Can I put 2010 in the bill?
    Chairman JOHNSON. We are going to get there earlier, so we 
do not want to do that.
    Mr. McCrery?
    Mr. MCCRERY. It seems to me that if we want to create a 
system which is the most flexible, the most able to adapt to 
new technology, to new trends in medicine, or whatever, we need 
to be very careful about imposing a system or even suggesting a 
particular system, and that is why I am a little nervous about 
just saying in order to do this thing quickly and get everybody 
on board, let's adopt the VA system and go with it. We need 
interoperability, but interoperability, if we do it right, can 
allow a number of from vendors, whatever, to come in and be 
innovative and develop new systems that could be better than 
the system that Mr. Stark is suggesting that we basically 
impose upon providers right now.
    Do you all disagree with that? Mr. Smith, you can go first.
    Mr. SMITH. Thank you. I fully support your position on 
that. Go back to our Advanced Health Information Network. We 
had interoperability, clinical, administrative, and financial. 
We allowed any of the providers to leverage any of the back-
room IT operations that the providers or other participants 
had, and had to form the interfaces into the common standards 
for the interoperability, and that worked. We plugged it 
together, and as I say, it was operational. That, all we had to 
do is work toward those standard interface points, and the 
back-room operations of all those systems remained in place.
    Mr. MCCRERY. Dr. Kizer?
    Dr. KIZER. Mr. McCrery, I would hope you wouldn't take my 
comments as suggesting that one should mandate VistA. What I am 
merely suggesting is that this public investment that has 
already been made be made more available to the commercial 
sector through a mechanism that was outlined in my written 
testimony. VistA is currently being used in the commercial 
sector. It is being used in hospitals and clinics in the 
private sector successfully. There are ways that its 
availability could be speeded up for those who chose to go that 
way. There are ways that those benefits that have been 
developed in the private sector could be fed back into the 
    What I am outlining is merely a mechanism to allow this to 
be an option that is more readily available in which it would 
develop the interfaces and other things with other systems.
    Mr. MCCRERY. Okay. Good.
    Mr. Henry?
    Mr. HENRY. If I can just comment, I think that while it 
would be ideal if we had a single government system that was 
paid for by the government, the reality is that at Partners we 
are actually dealing with a homegrown system. We are also 
allowing our physicians to use commercial systems. In order for 
those two to talk to each other, there has to be 
interoperability. The reason that we are still advocating for 
some kind of a fraud and abuse exception along these lines, 
however, is that even though you have software that may be 
free, you still have the cost of conversion; you have the cost 
of training; you have the cost of supporting with a help desk. 
Those are all costs that physicians at this point in time are 
not able to bear.
    Mr. MCCRERY. You have in your system both physicians who 
are employees of your system and physicians who are not 
employees. Is that correct?
    Mr. HENRY. That is correct.
    Mr. MCCRERY. Under the current Stark laws and anti-kickback 
laws, can you treat both your physician employees and your non-
employee physicians the same with respect to IT?
    Mr. HENRY. We cannot. We----
    Mr. MCCRERY. Explain the difference.
    Mr. HENRY. We have told our employed physicians that our 
homegrown system is the system that you are going to use. We 
have put it on all their computers, and since the computers are 
our computers, they are pretty much forced to use it unless 
they are technically challenged, which some of them are.
    With respect to the non-employed physicians, we cannot give 
that software away, nor can we pay for it and any other option 
that they would choose to buy because that would be considered 
remuneration. Since those physicians are in a position to refer 
to us, that would violate a very black-and-white Stark law.
    So, my CEO, when he found out about this, as he was putting 
together his signature initiatives concept, was very concerned 
that we were in pay-for-performance contracts that obligated us 
to reach certain goals that we could only reach by using 
through half of our physicians. We had to cajole, convince the 
rest of the non-employed physician community to pay for these 
on their own, because if we were to subsidize them, we would be 
in hot water with the Stark laws and the anti-kickback fraud 
and abuse laws.
    Mr. MCCRERY. So, you would like some safe harbor which 
would allow you to assist those non-employed providers with 
    Mr. HENRY. That is correct.
    Mr. MCCRERY. How do you counter the expressed fear of some 
that if you were to do that, if you were to assist your non-
employee providers with this technology and training and so 
forth, that it would create a captive referral system, for 
example, that you would just make them refer all their patients 
to you because they are indebted to you?
    Mr. HENRY. Well, the reality in our system is that we have 
a network that spans a pretty wide geographic area, and close 
to 60 percent of the physicians, community-based physicians in 
our network refer to other hospitals outside of our system. 
This network is really about providing care for the patients of 
the insurance companies that contract with that network. So, 
from our perspective, it is important to keep that network 
intact, and if we were to tell those physicians that in order 
to use our system they have got to refer to us, they wouldn't 
use it. Or if we were to tell them that our homegrown system 
was not interoperable with whatever system any of their other 
hospitals might be using, they would not adopt it.
    The other reality is that almost all the Partners hospitals 
are full. We have no incentive to increase the care at our 
    Finally, I should say that we are incentivized by our payer 
contracts to provide what we call the right care at the right 
place at the right time, which means to be more efficient. If a 
patient is more effectively cared for in a smaller community 
hospital at a lower cost, we get rewarded for that. So, we are 
simply asking for our ability to help physicians put together 
their own electronic medical record because we want to provide 
better care at lower cost, not because we need the referrals.
    Mr. MCCRERY. Well, what you have just outlined are 
basically reasons that the market would prevent you from 
controlling referrals from these physicians. I happen to think 
you are correct, and I have no problem with that, but there are 
some among us who do not really trust the market to protect 
consumers from that kind of activity. So, are there any 
precautions that you might build into the safe harbor that 
would tend to mitigate that possibility of creating a captive 
referral system?
    Mr. HENRY. Sure. Well, first of all, any support along 
these lines must not be able to take into account any kind of 
volume of referrals.
    Secondly, as a public policy matter, as any hospital should 
be looking to help with support to any local physician 
community, they ought to be looking at other criteria that 
relate to that physician's ability and commitment to deal with 
certain quality measures, their expertise in using electronic 
medical records and digital communications generally.
    We think that if you tie the physicians' readiness to adopt 
the quality measures and use the software that is being 
provided, and prohibit any of those considerations to relate to 
the volume or value of referrals, that those should be criteria 
that would go a long way to making sure that the safe harbor 
    Mr. MCCRERY. Thank you very much.
    Chairman JOHNSON. Thank you very much. I appreciate the 
panel's input.
    Mr. Henry, I did not get a chance to do it when we were 
questioning, but I appreciate very much the specificity of your 
concerns in your testimony with the OIG's proposal, and I did 
talk with him about it beforehand. It does not do any good to 
have an exemption that is as narrow either from the system's 
view or from, in a sense, the entity view as his thinking 
appeared to be in the opening effort. I think he had looked at 
your testimony and he is very serious about the public input 
that he has received, and we will see where that goes.
    I think this issue about what is open source and what is 
competitive is a very interesting and important one. I do think 
that innovation is what brought us to this point, and the 
government has never been an innovator. In fact, the big 
problem with the government is that we finally do catch on. By 
the time we legislate, we are behind the wheel, and then we do 
not pay attention for another 10 years. So, you get very sort 
of modern-thinking Members like Mr. Emanuel frustrated as can 
be, and I do not want that to happen here.
    So, nothing anyone is doing to my knowledge prevents a 
movement to open source, but whether the government should 
mandate that, I think that is a question that we need to look 
at in much greater depth than we have, and I thank you, Dr. 
Kizer, for bringing it up. I thank each one of your for you 
input and testimony and for the enormous amount of experience 
you have brought to the table today.
    Thank you. The hearing is adjourned.
    [Whereupon, at 4:30 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

       Statement of the American Clinical Laboratory Association

    The American Clinical Laboratory Association (ACLA) representing 
national, regional, and local laboratories appreciates the opportunity 
to provide comment on activities that will accelerate the widespread 
adoption of the electronic health record. ACLA members have an 
extensive history of providing the nation's hospitals and physicians 
with leading-edge health information technology (IT) streamlining 
laboratory test requisition and speeding the delivery of test results.
    The ACLA supports the Health Information Technology Promotion Act 
of 2005 (HR 4157) which proposes several needed improvements to 
facilitate the diffusion of health IT throughout the United States. 
These changes will help promote better outcomes for patients. Among the 
improvements are new Anti-kickback Safe Harbors and Stark Law 
exceptions; a study of, and subsequent authority to preempt some state 
privacy laws; and the replacement of ICD-9 diagnosis codes with ICD-10 
    Laboratories play a critical role in healthcare delivery by 
allowing for the rapid and timely utilization of health information by 
providers. Laboratories and the resultant medical information 
constitute up to 60% of the medical record. Diagnostic tests comprise 
only 1.6% of Medicare costs, but they influence a much larger portion 
(as much as 60-70%) of clinical decision-making that improves care and 
decreases cost. Virtually every health care community (i.e. Regional 
Health Information Organizations or RHIOs) that is trying to develop an 
electronic health information infrastructure is looking to incorporate 
laboratory data first. A recent nationwide survey by the eHealth 
Initiative found that, of those who have electronic health information 
exchange efforts under way, 60% plan to exchange laboratory information 
within six months to support quality, safety and efficiency goals. In a 
survey of hospitals, the number one IT function in the majority of 
hospitals today is the electronic order entry and review of results for 
diagnostic services.
    The reach of laboratories into physician offices and hospitals vis-
a-vis the provision of this hardware and software has served as a 
catalyst' in the evolution of health IT. For example, Quest Diagnostics 
Incorporated, a member of ACLA, has business relationships with 
approximately half of the physicians and hospitals in the U.S. Quest 
Diagnostics Incorporated receives 40% of orders and sends 60% of its 
results via the internet. Similar means of laboratory connectivity are 
offered by other ACLA's other members.
    The federal government, quality organizations, the Medicare Payment 
Advisory Commission (MedPAC) and others recognize that laboratory data 
are the essential building block for assessing quality care and will 
have a critical role in pay-for-quality initiatives. Laboratories can 
and have been used to measure a provider's performance as a critical 
component of health care delivery; however, this contribution cannot be 
realized without incurring additional cost that must be recognized and 
reimbursed. In a detailed study of practice and laboratory 
connectivity, the eHealth Initiative recently recommended incentives 
that could be provided for including electronic laboratory data as part 
of pay-for-performance reporting. One example from the report would be 
to provide short term incentives, based on the volume of laboratory 
messages processed, up to a monthly dollar limit per clinician that 
would encourage implementation of interfaces. Incentives such as these 
can be an important driver of adoption of new technologies. By 
providing incentives encouraging the transmission of laboratory test 
requisition and results reporting, the healthcare system will actually 
save money through reductions in duplicative testing, better 
coordinated care and decreases in morbidity and mortality.
    Because of the value that laboratories convey in the data they 
transmit, they have pioneered the provision of secure, streamlined IT 
solutions to order and transmit laboratory tests. This is a critically 
important and highly valued function. So important that since 1995 
laboratories have had a limited exception under the Stark Law to 
provide ``items, devices, or supplies that are used solely to . . . 
order or communicate the results of tests or procedures for such 
entity.''\1\ This is a fundamental capability for laboratories to 
render services to providers and a critically important function that 
must be maintained. Clinicians place a high value on being able to 
order laboratory services and receive laboratory results electronically 
because it improves legibility, decreases error rates, produces more 
timely results (including STAT testing), and allows the monitoring of 
redundant or duplicative testing. The result is improved clinical 
outcomes, and improved clinical care efficiency with the long-term 
benefit of reduced healthcare costs.
    \1\ 42 USC 1395nn(h)(1)(C)
    ACLA recognizes that physicians, hospitals and other providers 
routinely cite the fear of legal action/debarment from Medicare as one 
of the biggest deterrents towards adoption of health IT. Accordingly, 
HR 4157 establishes a new exemption for the provision of health IT and 
related training. ACLA believes this legislative proposal, if enacted, 
would help to address some of these concerns and prompt further 
adoption of the health IT; however, ACLA believes such an exemption 
should be crafted carefully to diffuse the technology while guarding 
against abuses. By doing so, providers will continue to compete on the 
services they are providing and not, for instance, the size of a 
monitor. However, in any law or regulation laboratories must be among 
those entities permitted to offer these items or services because of 
the critical role laboratories have, and continue to play in 
facilitating health IT adoption in the health care community. ACLA was 
particularly perplexed with HHS' Office of the Inspector General's 
recent notice on the establishment of new Stark Law exceptions and 
Anti-Kickback Safe Harbors which proposes to exclude laboratories from 
the newly created exemptions.
    ACLA also supports the legislation's federal preemption of state 
laws that contradict the Stark Law exceptions and Anti-Kickback Safe 
Harbors established under the bill. Today, there are several states 
whose Stark' laws are complicated and have different requirements than 
the federal law. Similar to the privacy issue, the problem is not just 
that these state laws are more stringent, but that there are many 
different standards. The differences in these state laws fall into 
several categories, e.g. the scope of the exceptions to the prohibition 
or the scope of what is considered a designated health service.' By 
creating a federal preemption, Congress can help address the fear and 
confusion many providers continue to have as they contemplate adoption 
of various health IT solutions.
    Another needed change that HR 4157 addresses is the need for 
federal preemption of state laws related to the security and 
confidentiality of health information. HR 4157 requires a study of: 1) 
the degree to which laws vary among the states; 2) between state laws 
and HIPAA; 3) how such variations adversely impact confidentiality and 
the electronic exchange of health information. Upon enactment, Congress 
will have three years to pass legislation establishing uniform federal 
standards and preempting state laws with regard to confidentiality and 
privacy. If not, then the Secretary of HHS is permitted to adopt 
regulations based on the results of the study.
    ACLA supports this provision because the patchwork of state privacy 
laws is an impediment to health information exchange. For example, 
LabCorp, a large national laboratory, has been invited to participate 
in two of the eight regional Medicare Health Support pilot programs 
(previously known as the Chronic Care Improvement Program) authorized 
by section 721 of the Medicare Modernization Act. LabCorp has been 
invited to participate in an effort with CIGNA HealthCare in Georgia as 
well as a program operating in central Florida being operated by Green 
Ribbon Health, LLC. These entities will offer self-care guidance and 
support to chronically ill Medicare beneficiaries to help them manage 
their health, adhere to their physicians' plan of care, and ensure that 
they seek the medical care and Medicare-covered benefits that they 
need. LabCorp's role in the pilot programs would be to transmit 
laboratory data to CIGNA HealthCare and Green Ribbon Health for those 
beneficiaries who voluntarily participate in the program. This 
information would then be used to help monitor the conditions of 
participants and ultimately, improve their outcomes.
    Unfortunately, despite the well-intended efforts of these programs, 
more restrictive state laws in Florida and Georgia governing the 
release of lab results have prevented LabCorp from transmitting these 
important results to Green Ribbon Health or CIGNA HealthCare until its 
concerns about the application of those laws to these requests have 
been addressed. More specifically, the Florida and Georgia laws 
preclude providing test results to anyone other than the ordering 
physician or provider (or to a person specifically authorized by the 
ordering physician).
    HR 4157 also addresses the needed replacement of the International 
Classification of Diseases, 9th edition, Clinical Modification (ICD-9-
CM) diagnosis and procedure billing codes with ICD-10-CM/PCS codes. ICD 
diagnosis codes are used by inpatient and outpatient providers for 
billing and reimbursement. Under the Medicare program, laboratories are 
paid by including ICD-9 codes on their claims to provide medical 
necessity. These ICD-9 codes are provided by the physician to the 
laboratory and are subsequently attached to a claim and submitted to 
CMS. Today, as many laboratories will attest, problems persist with 
physicians not providing the appropriate ICD-9 codes in order for 
laboratories to get paid. Currently, ICD-9 provides approximately 
13,000 diagnosis codes. Take into account that ICD-10 provides 120,000 
diagnosis codes, thus one can see the need for an extended phase in of 
the new system.
    ACLA recommends that the implementation period for the transition 
to ICD-10 be changed from a two-year phase in period to a five-year 
period. Doing so would provide adequate time to reprogram all health 
care providers' and payers' computer systems to accommodate the new, 
longer ICD-10 codes. In addition, considerable time and expense will 
also have to be spent on client education and testing of the new 
systems. During this transition period' it should be permissible for 
providers to bill using either the ICD-9 or ICD-10 standards.
    The following examples demonstrate the increased coding complexity 
posed by switching from ICD-9 to ICD-10. There are currently nine ICD-9 
codes that can be selected for classifying a patient with tuberculosis, 
based on the location and specific type of infection. ICD-10 expands 
the number of codes to 39. Similarly, there are seven classification 
codes for thyroid related disease in ICD-9. ICD-10 expands the number 
of codes to 44. This significant expansion in the number of codes will 
require reprogramming of provider and payer systems, physician and lab 
coder education, and general interoperability issues that need to be 
resolved to allow for a smooth transition from ICD-9 to ICD-10.
    ACLA supports the Health Information Technology Promotion Act's new 
Anti-kickback Safe Harbors and Stark Law exceptions, the bill's 
proposed preemption of some state privacy laws, and a replacement of 
the ICD-9 with ICD-10 with a five-year transition period.
    In summary, it has been said that every effort in the health care 
public policy arena aims to improve three different aspects of health 
care: better, faster, and cheaper. Few reforms meet all three 
objectives. Health IT does meet all of these objectives. It will make 
health care better by improving outcomes; faster, by facilitating not 
only the delivery of information but the coordination of care; and 
cheaper, by reducing the costs of doing business, be it a reduction in 
duplicative testing or by saving precious time previously spent on data 
    Madame Chairman, thank you for the opportunity to share ACLA's 
perspective on ways to promote electronic health records and a smarter 
health information system. We are ready to work with you on this 
important and vital legislation. If you have questions or need any 
additional information, please do not hesitate to contact us.
                                                         Alan Mertz
                                                       Jason DuBois
                               Vice President, Government Relations


              Statement of American College of Physicians

    The American College of Physicians (ACP)--representing 119,000 
physicians and medical students--is the largest medical specialty 
society and the second largest medical organization in the United 
States. Of our members involved in direct patient care after training, 
50 percent are in practices of 5 or fewer physicians and 66 percent are 
in practices of 10 or fewer. Internists provide care for more Medicare 
patients than any other medical specialty, making movement toward a 
Nationwide Health Information Network a top priority. We greatly 
appreciate the interest of Subcommittee Chairman Nancy Johnson and 
Ranking Member Pete Stark in legislative proposals to encourage the 
widespread adoption of electronic health records.
    ACP believes the widespread of adoption of electronic health 
records will only be successful if we first recognize the complex 
issues surrounding financing, interoperability, assistance with 
redesign of practice workflow, and provide technical support and 
training. We believe Congress has an important role to play in these 
areas, particularly for physicians in small practices, to support the 
transition to a paperless office.
    The Institute of Medicine's (IOM) 2001 Report, ``Crossing the 
Quality Chasm--A New Health System for the 21st Century,'' suggested 
that up to 98,000 Americans die each year as a result of medical 
errors. The report introduced the notion that many of these lives could 
be saved through the advantages of information technology. The IOM 
report cautions, however, ``In the absence of a national commitment and 
financial support to a build a national health information 
infrastructure--the progress of quality improvement will be painfully 
slow.''\1\ Since then, numerous studies and other policy experts have 
confirmed that full adoption and utilization of health information 
technology (HIT) can revolutionize health care delivery by improving 
quality of care and reducing high medical costs.
    \1\ Institute of Medicine, Crossing the Quality Chasm--A New Health 
System for the 21st Century, March 2001, and U.S. Department of Human 
Services, Information for Health: A Strategy for Building the National 
Health Information Infrastructure, Report and Recommendations from the 
National Committee on Vital and Health Statistics, November 15, 2001.
    Meanwhile, Congress and the Administration have taken initial steps 
to advance the adoption of an interoperable health information 
infrastructure model. The most significant commitment was the April 
2004 announcement by President Bush calling for the widespread adoption 
of interoperable electronic health records within the next decade. To 
oversee this bold ten-year initiative, the President announced the 
creation of the Office of National Coordinator for Health Information 
Technology (ONCHIT), and named its first Director, Dr. David J. 
Brailer. Subsequently, ONCHIT devised a 10-year funding strategy for 
policymakers to consider in speeding HIT adoption nationwide. According 
to ONCHIT's ``Framework for Strategic Action,'' Congress should 
consider several funding options, including additional Medicare 
reimbursement as well as the use of loans, tax credits, and grants. It 
also should consider the easing of fraud and abuse laws to allow the 
sharing of electronic hardware. Since that time, Congress has 
introduced dozens of bills to begin to mold the framework for adopting 
HIT infrastructure. Unfortunately, no single bill has made it out of 
both Houses.
    ACP strongly supports efforts by the Administration and Congress to 
speed the adoption of uniform standards for health information 
technology (HIT). The College is committed to providing its own members 
with practical tools to help them improve quality. ACP's Physicians 
Information and Education Resource (PIER) provides ACP members--at no 
cost to them--with access to ``actionable'' evidence based guidelines 
at the point of care for over 300 clinical modules. PIER has also been 
incorporated into several electronic health record systems. It is 
currently in the process of aligning its evidence-based content to 
support a starter set of measures selected by the Ambulatory Care 
Quality Alliance (AQA). PIER is also creating paper order sets that 
imbed such quality measures so that physicians who have not made the 
transition to electronic health records could still utilize PIER 
content to support their participation in performance measurement 
initiatives. ACP's Practice Management Center has developed resources 
to help internists in the decision-making process on electronic health 
records and is leading an initiative to provide internists with tools 
and best practices to help them redesign their office processes to 
improve health care quality.
    We also believe, however, that without sufficient financial 
assistance from the federal government to incentivize providers to 
purchase the full range of HIT, particularly those in small practices, 
we will be unable to achieve a smooth transition into a fully-
integrated HIT society. ACP is very supportive of the initiative 
announced by HHS Secretary Mike Leavitt to create the American Health 
Information Community (AHIC), a public-private collaboration that will 
help develop standards and achieve interoperability of health 
information. This collaboration will provide a forum for interested 
parties to recommend specific actions that will accelerate the 
widespread application and adoption of electronic health records and 
other health information technology. Meanwhile, we believe it is 
absolutely essential for Congress, as a first step, to begin to fully 
fund pilot testing of interoperable HIT into small and large practices. 
Small practices, in particular, will need financial assistance for the 
initial start-up costs of acquiring the technology, but also financial 
recognition of the ongoing costs.

Privacy and Security Concerns
    ACP has long recognized the need for appropriate safeguards to 
protect patient privacy and security. We believe that trust and respect 
are the cornerstones of the patient-physician relationship and to 
quality health care. We further believe that the presence of trust, 
respect, and privacy will enhance treatment by restoring confidence in 
the health care system. ACP recognizes that patients have a basic 
fundamental right to privacy that includes the information contained in 
their own medical records--whether in paper or electronic form.
    We strongly believe that physicians--already governed by strict 
ethical codes of conduct, state professional disciplinary codes, and 
the Hippocratic oath--who collect protected health information have a 
duty and responsibility to protect patients from violating their 
privacy. Patients need to be treated in an environment in which they 
feel comfortable disclosing sensitive and confidential health 
information to a physician they can trust. Otherwise, there may be a 
``chilling effect'' for patients to fully disclose the most sensitive 
of information (conditions or symptoms), thereby reducing the 
effectiveness and timeliness of treatment, or, they may avoid seeking 
care altogether for fear of the negative consequences that could result 
from disclosure. The discussion of moving toward an electronic health 
information exchange only increases the likelihood of fraud and abuse.
    In 2002, HHS promulgated the Privacy Rule (45 CFR Parts 160 and 
164) under legislative authority provided by the Health Insurance 
Portability and Accountability Act of 1996 (HIPAA). Included in the 
Privacy Rule is the provision that allows for the preemption of federal 
law provided that state law is more stringent. Unfortunately, this 
well-intended provision has created a patchwork of privacy laws 
throughout the country that has the effect of restricting the free flow 
of medical information. As we move toward creating a nationwide 
interoperable HIT system, the different laws will only serve as a 
hindrance in that effort.
    ACP strongly supports the provision contained in H.R. 4157, the 
``Health Information Technology Promotion Act of 2006'' that requests a 
50-state study of privacy and security laws to examine how such laws 
will effect the flow of electronic health information. We hope that 
Congress will act to correct any unintended restrictions by creating a 
uniform federal standard with regard to the exchange of electronic 
health information.
    Finally, the College believes that certain provisions of the 
Privacy Rule need to be expanded to permit the movement toward an 
interoperable exchange of health information. First, we believe the 
minimum necessary provision should be reexamined in a way that balances 
the need for a complete medical record with adequate protections for 
patients against discrimination or any other form of prejudice. Second, 
we believe Congress should expand its definition of ``covered 
entities'' to include any individual who accesses protected health 
information. Finally, we believe a private right of action should exist 
for all entities that knowingly, under false pretenses, or for personal 
gain violate the privacy or security of an individual. Patients must 
have assurances that adequate firewalls against unauthorized 
individuals gaining access to sensitive data is in place. Congress must 
ensure these safeguards are present.

Finanical Barriers
    The single biggest barrier to achieving fully interoperable HIT 
across the nation is the substantial cost in acquiring the necessary 
technology. This obstacle is especially acute for physicians practicing 
in small office settings, where three-fourths of all Medicare 
recipients receive outpatient care.\2\ An additional related barrier is 
that public and private payers, not the physicians, will realize the 
savings from physician investment in acquiring the necessary HIT (i.e., 
electronic health records, electronic prescribing, clinical decision 
support tools, etc).
    \2\ Center for Studying Health System Change, ``Most Medicare 
Outpatient Visits Are to Physicians With Limited Clinical Information 
Technology,'' July 2005.
    The initial start-up costs for the purchase of a fully 
interoperable HIT system can be substantial. Depending on the size of 
the practice and its applications, acquisition costs on average range 
from $16,000 to $36,000 per physician.\3\ (The Harvard Center for 
Information Technology Leadership estimates HIT systems cost about 
$29,000 per physician). The ongoing costs associated with training, 
upgrades and maintenance, and system support of the HIT system make 
these estimates substantially higher over the lifetime of the practice.
    \3\ Congressional Research Service, ``Health Information 
Technology: Promoting Electronic Connectivity in Healthcare,'' The 
Library of Congress, April 13, 2005.
    Unfortunately, the savings from interoperable HIT will largely go 
unrecognized for physicians making the investment to convert their 
practices. In fact, it's more likely the majority of the savings from 
physician investment will be recognized by payers and patients--through 
a reduction in duplicative care, the lowering health care 
administrative costs leading to lower health insurance rates, and 
avoiding costly medical errors--not to the providers that pay the 
initial and ongoing implementation costs. ACP strongly believes that 
physicians' collective and individual contributions must be recognized 
in order to achieve Medicare and Medicaid savings through HIT adoption. 
Current reimbursement policies should allow for individual physicians 
to share in the system-wide savings that are attributable to their 
participating in HIT and other quality improvement programs.
    While the College and the physician community recognize the great 
potential for improving the overall quality of care that HIT brings, 
the majority of small practices cannot afford to expend the necessary 
capital to make the initial investment. For physicians dealing with a 
multitude of financial issues--ranging from low reimbursement under 
Medicare and Medicaid, declining fees from managed care, the rising 
costs of medical malpractice insurance, and the cost of compliance 
under increasing state and federal regulation--the majority are not in 
any financial position to make the initial $16,000 to $36,000 
    Even for those physicians who able to afford the initial costs, 
many challenges await. As described in the August 2, 2005 Annals of 
Internal Medicine, the conversion to electronic medical records impacts 
a practices finances, productivity, and office environment. According 
to the authors of this 4-internist medical practice in Philadelphia, 
Pennsylvania, ``Its financial impact is not clearly positive; work 
flows were substantially disrupted; and the quality of the office 
environment initially deteriorated greatly for staff, physicians, and 
patients. That said, none of us would go back to paper health records, 
and all of us find that the technology helps us better meet patient 
expectations, expedites many tedious work processes (such as 
prescription writing and creation of chart notes), and creates new ways 
in which we can improve the health of our patients.''
    The experience of this small practice is not atypical. While this 
practice should be commended for weathering the myriad of challenges in 
adopting electronic health records, Congress needs to recognize that 
most physician practices are not financially positioned to absorb the 
many hardships that lie ahead.

The Need for Congressional Involvement
    The current Medicare physician reimbursement system, the 
Sustainable Growth Rate (SGR), does not reward physicians for quality. 
Because physicians are paid on a per-procedure or per-service basis, 
the Medicare reimbursement structure emphasizes volume over quality. 
Meanwhile, physicians are facing another estimated 4.6 percent payment 
cut in January 2007. These cuts in payments deprive physicians of the 
resources needed to invest in health information technology and quality 
    In recognition of the need for a Medicare reimbursement system that 
rewards innovation and quality, Congress is examining the role that 
value-based purchasing programs might play in the Medicare program. We 
commend Chairman Johnson for her leadership on developing legislation, 
H.R. 3617, ``the Medicare Physician Value Based Purchasing Act of 
2005,'' to begin linking payments to quality, thereby creating an 
incentive for HIT.  We continue to support the bill, but we also 
recommend that the Subcommittee consider a legislative framework that 
would go beyond grafting pay-for-performance on the current 
dysfunctional payment system to one that would create sufficient and 
sustained incentives for quality improvement, efficiency, and 
physician-directed coordination and management of care for patients 
with multiple chronic diseases.
    ACP strongly believes a solution to this problem lies in changing 
the Medicare physician payment policies to reward those physicians who 
fully incorporate all aspects of HIT and participate in reporting on 
endorsed performance measures.\4\
    \4\ Under today's Medicare payment formula, physician payment is 
based upon several factors: relative value units (RVUs) for each 
service, reflecting the relative amount of physician work effort, 
practice expenses, and malpractice insurance expenses involved with 
furnishing each service; a dollar conversion factor that translates 
these RVUs into monetary payment amounts; and geographic practice cost 
indexes (GPCIs) for physician work, practice expenses, and malpractice 
insurance expenses to reflect differences in physician practice costs 
among geographic areas.
    We believe an element of this concept should include reimbursement 
for the use of HIT, leading to widespread adoption of electronic health 
records in physician practices.
    As a first step, the College recommends Congress consider 
legislation that builds into the Medicare physician payment system an 
add-on code for office visits and other evaluation and management (E/M) 
services. This would fairly recognize the ongoing, everyday costs 
associated with maintaining such systems. This payment mechanism should 
identify that a service was facilitated by electronic health data 
systems, such as electronic health records, electronic prescribing and 
clinical decision support tools, and reimburse accordingly. This 
legislation should be rolled into a broader reform of the Medicare 
payment system that includes quality measures. Of course, this 
innovative way of reimbursing physicians will come at a cost, so 
Congress should seek to reform the scoring models used by the 
Congressional Budget Office (CBO) to more accurately reflect savings 
from efficiencies and cost savings that will result from the use of 
electronic health records and quality initiatives.
    In addition, Congress should also allocate the necessary funding 
for small practices to make the initial HIT investment to purchase the 
necessary hardware and software. The majority of bills that have been 
introduced in the 109th Congress only utilize grants, loans, tax 
credits, or a combination of the three. We believe those funding 
mechanisms alone are insufficient to put the necessary HIT systems into 
the hands of small physician practices.
    Also, we specifically urge the Congress to pilot test a new model 
for organizing and delivering primary and principal care that addresses 
the fact that the U.S. health care system is poorly prepared to meet 
the current, let alone the future health care needs of an aging 
population. This model, called the advanced medical home model, is 
based on the premise that the best quality of care is provided not in 
episodic, illness-oriented, complaint-based care, but through patient 
centered, physician-guided, cost-efficient, longitudinal care that 
encompasses and values both the art and science of medicine.
    Attributes of the advanced medical home include promotion of 
continuous healing relationships through delivery of care in a variety 
of care settings according to the needs of the patient and skills of 
the medical providers. Physicians in an advanced medical home practice 
are responsible for working in partnership with patients to help them 
navigate the complex and often confusing health care system. They 
provide the patient with expert guidance, insight and advice, in 
language that is informative and specific to patients' needs. In the 
advanced medical home model, patients will have a personal physician 
working with a team of health care professionals in a practice that is 
organized according to the needs of the patient.
    ACP envisions that qualified practices will have the following 
kinds of services in place:

      Primary care physicians who practice in an advanced 
medical home would be responsible for partnering with the patient to 
assure that their care is managed and coordinated effectively;
      The practice would use innovative scheduling systems to 
minimize delays in getting appointments;
      Physicians in the advanced medical home would use 
evidence based clinical decision support tools at the point of care to 
assure that assure that patients get appropriate and recommended care;
      They would partner with patients to help patients with 
chronic diseases, like diabetes, manage their own conditions to prevent 
avoidable complications. Patients would have access to non-urgent 
medical advice through email and telephone consultations;
      The practice would have arrangements with a team of 
health care professionals to provide a full spectrum of patient-
centered services; and
      Advanced medical home practices will also be accountable 
for the care they provide, by using health information technology to 
provide regular reports on quality, efficiency, and patients' 
experience measures.

    This effort would complement ongoing and planned CMS pilot programs 
utilizing HIT such as the Medicare Physician Group Practice Project, 
the Medicare Care Management
    Performance Demonstration (MMA Section 649), and Medicare Health 
Support Pilot
    (MMA Section 721) and Medicare Health Quality Demonstration Program 
    Section 646). ACP recommends that Congress expand these 
demonstration pilots, where appropriate, to a larger number of states 
(large and small) and more practices in each state; and allowing all 
participating practices to receive financial incentives not just those 
in study group.
    Once developed, HIT standards will need real-world pilot testing. 
This should come as no surprise to Congress given the dire situation we 
found ourselves in 2003 with the implementation of standards mandated 
under HIPAA Transaction and Code Sets Standard. As with HIPAA Standards 
compliance, implementation of HIT standards will require transition and 
a significant amount of pilot testing by the full range of health care 
providers from all sectors with adequate HIT in place. Testing must 
include physicians in solo/small and large practice settings (rural and 
urban areas), psychologists, hospitals, community health centers, 
skilled nursing facilities, laboratories, and pharmacies. All 
participants in the pilot must utilize the full range of HIT systems 
and the necessary ongoing training must be provided. Therefore, we 
believe Congress must provide the necessary funding to ensure adequate 
pilot testing of HIT standards across all health care sectors to 
determine feasibility, disclose barriers, and develop solutions to 
ensure a smooth transition.
    Finally, the College believes Congress should pass provisions also 
included in H.R. 4157 that seek to lift the prohibition of health care 
entities assisting physician practices from purchasing HIT. While we do 
not believe the majority of potential Donors protected by the proposed 
exceptions and safe harbors will have the necessary financial resources 
to make a major impact regarding implementation of this technology, 
there will be some who are financially able to offer this kind of 
assistance and it is important we allow this transaction to occur.
    In summary, the College believes Congress should take the following 
legislative actions to speed the adoption of HIT:

    1. Reform the Medicare reimbursement formula to specifically reward 
quality and the use of electronic health records;
    2. Provide funding through a combination of grants, loans, and tax 
credits to assist small physician practices absorb the initial expense 
of acquiring electronic health records;
    3. Direct CMS to expand demonstration projects using the medical 
home concept and expand MMA's Section 649, Section 721, Section 646;
    4. Reform the scoring models used by CBO to more accurately reflect 
efficiencies and cost savings from the use of electronic health record 
    5. Pilot test the use of the full range of HIT and standards across 
of health care sectors;
    6. Develop a uniform federal mandate for privacy and security; and
      7. Reform the Anti-kickback and Stark Self-referral laws to allow 
health care entities to directly collaborate with physicians to 
purchase health information technology without fear of violating the 

Legislation in the 109th Congress
    In the 109th Congress, a flurry of legislative proposals have been 
introduced to define the federal role in speeding the adoption of HIT. 
ACP is supportive of many of the bills that have come forward, 
especially those that we believe will lead to the achievement of 
universal acceptance and widespread adoption of HIT. While not an 
exhaustive list of legislation supported by ACP, the College believes 
the following bills present the best opportunity to advance adoption of 
    The legislation, H.R. 4157, the ``Health Information Technology 
Promotion Act of 2006,'' introduced by Chairmen Johnson and Nathan 
Deal, has many favorable provisions to speed adoption of health 
information technology. In particular, the College is supportive of 
efforts to create a safe harbor to the Federal Anti-kickback Statute 
and an exception to the Self-Referral Law, and the authorization to 
study and reconcile the variation of State and Federal standards 
established under the HIPAA. However, we have concerns that conversion 
to a more granular coding system (ICD-10) is unwarranted at this time 
and will create an unnecessary burden and administrative hassle to 
practicing physicians. Finally, we believe the legislation fails to 
make any significant attempt to address the financial issues facing 
small physician practices. However, we acknowledge that H.R. 3617 may 
be a more appropriate vehicle to address these concerns.
    The College is also supportive of legislation, H.R. 4641, ``the 
Assisting Doctors to Obtain Proficient and Transmissible Health 
Information Technology (ADOPT HIT) Act of 2005,'' introduced by 
Representatives Phil Gingrey and Charlie Norwood. This legislation 
would allow physician practices to deduct the purchase of HIT by 
increasing the small business tax deduction under Section 179. We 
believe this approach will capture many physician practices who are 
struggling to absorb the initial costs of HIT, but would have a greater 
impact if combined with changes in Medicare payment policies, as 
discussed above, to support the ongoing expenses associated with use of 
health information technology to improve quality.
    We strongly believe that the most effective way to encourage the 
widespread adoption of HIT is to combine federal assistance with the 
initial costs of acquiring technology, and the ongoing costs associated 
with training, upgrades, and lost productivity. The College is 
particularly supportive of the bipartisan bill, H.R. 747, the National 
Health Information Incentive Act,'' sponsored by Reps. Charles Gonzalez 
(D-TX) and John McHugh (R-NY), because it specifically targets those 
small physician practices who are in need of the most financial 
assistance. Like most of the legislative proposals introduced so far, 
H.R. 747 offsets the initial start-up costs and ongoing training and 
maintenance costs of acquiring interoperable HIT systems by providing 
grants, loans, and refundable tax credits. But more importantly, the 
legislation builds into the Medicare physician payment system an add-on 
code for office visits and other evaluation and management (E/M) 
services, care management fees for physicians who use HIT to manage 
care of patients with chronic illnesses, and payments for structured 
email consults resulting in a separately identifiable medical service 
from other E/M services. These fees would be triggered if the procedure 
or service was facilitated by an electronic health data system (such as 
electronic health records, electronic prescribing and clinical decision 
support tools) when used to support physicians' voluntary participation 
in performance measurement and improvement programs.  Additionally,H.R. 
747 takes the appropriate step of establishing two-year pilot testing 
of the standards and the determining quality improvements and cost 
savings of the integration of HIT.
    In addition, the College is also strongly supportive of the 
bipartisan bill, S. 1227, the ``Health Information Technology Act,'' 
introduced by Sens. Debbie Stabenow (D-MI) and Olympia Snowe (R-ME). 
Like the Gonzalez-McHugh bill, S. 1227 includes one-time tax credits 
and grants for the purchase of HIT as well as Medicare physician 
payment changes that recognize the ongoing costs in maintaining HIT by 
authorizing adjustments to Medicare payment when an identifiable 
medical service is provided using HIT.
    In summary, the College strongly believes Congress should provide 
the necessary funding to offset the initial costs in obtaining HIT, but 
it should also recognize the unquantifiable and ongoing costs in 
utilizing HIT. It is this combination of one-time and on-going 
financial incentives put forward by H.R. 747 and S. 1227 that will 
substantially speed HIT adoption and improve access to physician 
practices with HIT, resulting in tremendous system-wide savings. 
Congress should recognize the collective and individual contributions 
needed to achieve Medicare and Medicaid savings through the adoption of 
HIT. Therefore, we believe funding initiatives should allow for 
individual physicians to share in the system-wide savings that are 
attributable to their participating in HIT and other performance 
measurement and improvement programs. We believe this concept dovetails 
nicely with Chairman Johnson's legislation, H.R. 3617, ``Medicare 
Physician Value Based Purchasing Act of 2005,'' and support its 

    ACP is pleased that the House Committee on Ways and Means 
Subcommittee on Health is examining the congressional role in 
accelerating the adoption of health information technology. We strongly 
believe Congress has a very important function in promoting the 
adoption of uniform standards and providing the necessary initial and 
ongoing funding mechanisms to assist small physician practices to adopt 
and utilize HIT. The benefits of full-scale adoption of interoperable 
HIT will be significant, leading to a higher standard of quality in the 
U.S. health care system. Unfortunately, without adequate financial 
incentives, small physician practices will be left behind the 
technological curve and their patients with them. We eagerly look 
forward to working with the Subcommittee to make the widespread 
adoption of electronic health records a reality.


 Statement of David G. Schulke, the American Health Quality Association
    Good afternoon. My name is David Schulke, and I serve as the 
Executive Vice President of the American Health Quality Association 
(AHQA), the national association representing Quality Improvement 
Organizations (QIOs) and professionals working to improve the quality 
of health care in communities across America. It is my pleasure to 
provide testimony today about health information technology (HIT) and a 
new initiative providing hands-on help to physicians in every state and 
territory in the United States.
    As many as 98,000 Americans die each year from medical errors while 
receiving hospital care, with another 90,000 serious or fatal 
preventable adverse drug events occurring in the community-dwelling 
elderly each year. That revelation in a landmark 1999 Institute of 
Medicine report alerted the nation to a significant challenge and 
spurred hundreds of initiatives at the local and national levels to 
reduce medical errors and improve health care quality. Medicare and the 
national network of QIOs have been at the forefront of these efforts.
    At the core of QIO quality improvement work is the identification 
of safer and more effective care processes, and the promotion of these 
clinical practices to improve patient safety and reduce medical errors. 
Under a performance-based three year contract with Medicare, QIOs work 
with thousands of hospitals, doctors, nursing homes, home health 
agencies and health plans across the country to help prevent disease, 
promote patient safety, and improve the delivery of high quality, 
evidence-based care. QIOs are now promoting HIT in hospitals, physician 
office practices, and home health agencies, based on growing evidence 
that effective use of HIT can improve both quality and efficiency in 
health care.

Helping Physicians Adopt Health Information Technology
    The QIOs' experience with helping physicians adopt HIT began two 
years ago in a four state pilot project known as the Doctor's Office 
Quality--Information Technology project, or DOQ-IT. The aim of this 
project was simple--to achieve better quality outcomes for patients and 
improve efficiency for physicians by helping them adopt Electronic 
Health Records (EHRs).
    Under the DOQ-IT project, QIOs in California, Utah, Arkansas and 
Massachusetts collectively helped nearly 1,000 practices adopt HIT. The 
QIOs provided assistance throughout each phase of HIT adoption, from 
assessment and planning to selection, implementation, evaluation and 
improvement. These QIOs helped practices to:

      Assess their readiness for HIT,
      Develop a project plan and timeline that takes readiness 
gaps into account,
      Understand potential return on investment (ROI),
      Identify the range of functionalities needed in an EHR,
      Evaluate different products in a crowded market,
      Select a product that meets their needs,
      Know what to expect in contracting,
      Redesign workflow and care processes, and
      Use of all of the capabilities of the installed HIT 
system to improve care and efficiency.

    What we learned from the pilot project is that providers and 
practitioners need help. While financial help is of paramount 
importance, and I know that the Chairwoman's legislation begins to 
provide some assistance in this area by addressing some anti-kickback 
provisions of law, the truth is that even free equipment and software 
would not be well utilized without substantial changes to clinical 
operations. Physicians need help from independent organizations that 
can be there for them throughout the process of adoption, 
implementation and effective use of HIT. They need support from systems 
change experts who can help ensure that care processes are redesigned 
to reflect best practices. Providers also need support to ensure that 
they are utilizing their HIT system to its fullest capacity. As Members 
of the Subcommittee well know, the promise of HIT lies not in simply 
automating current practices, but in transforming them. If the result 
of our policies is merely to persuade providers to buy expensive EHR 
systems to automate practices that are inefficient and produce poor 
quality, all we will have accomplished is the proliferation expensive, 
inefficient and poor quality systems.
    This hands-on support is needed because literature and experience 
tell us that as many as half of all EHR implementations fail for one 
reason or another, often because practices did not go through the 
rigorous preparation and development necessary for success.
    The four QIOs in the DOQ-IT pilot spent considerable time trying to 
understand causes of failure and address them in their process change 
models. From the pilot, we know that some things are critical to 
success, for example, having a physician champion to lead the project 
and holding regular staff meetings. The QIOs created ``readiness 
assessments'' to gauge where the practice is with respect to critical 
success factors. When these factors were weak or missing, the QIOs 
helped build them into the practice's project plan and timeline. By 
increasing awareness and use of these best practices, QIOs contributed 
to physician success.
    But what about the ten to fifteen percent of ambulatory practices 
already using EHRs? Why did so many of these doctors come to the QIOs 
asking for help?
    The reason is that these practices know that their systems are 
capable of much more than simply serving as an electronic record of 
their care. In Utah, for example, one clinic had been using their EHR 
system for seven years, but had never turned on the clinical decision 
support or disease management functions because using those functions 
on a regular basis simply did not fit into their daily workflow. The 
clinic asked their QIO, HealthInsight, for help. HealthInsight showed 
the clinic how to evaluate their existing workflow and redesign their 
care processes so that the practice could utilize these high-level 
functions of their IT equipment--functions which are so central to 
improving quality.
    This illustrates why it is critical for QIOs to help physicians 
both with and without existing HIT systems--helping one and not the 
other leaves a large gap by failing to address both effective adoption 
and effective use of HIT.

HIT Assistance Now Available Nationally
    Right now, QIOs across the country are doing just that, based on 
the work of the pilot state QIOs, HealthInsight, Lumetra (the 
California QIO), the Arkansas Foundation for Medical Care, and MassPRO 
(the Massachusetts QIO). All QIOs have been trained on the models they 
used and the lessons they learned. In August of last year, QIOs 
received funding from Medicare to support over 4,000 primary care 
practices across the country during the next two years, and 3,000 
practices have already signed up for assistance from their local QIO in 
just the past eight months. This is despite the fact that QIOs don't 
give physicians any money to help them purchase or implement these 
    This assistance is already proving to be highly valued by 
physicians in the field. As a California family physician told us, he 
is glad he worked with his QIO, Lumetra, on EHR adoption. Without their 
expert help, he says, ``I would probably have gotten so fed up that I 
would have missed out on what is going to be a literal transformation 
in the way that I practice medicine.''
    Of the total number of practices QIOs will work with, at least 80% 
are the kind of practices that most need help--small and medium sized 
practices with no HIT systems to begin with. And these practices aren't 
just in suburban areas--they are urban, and they are rural. In 
addition, to reduce health care disparities, QIOs have made a 
particular effort to reach out to practices treating underserved 
patients. To date, nearly 700 of the 3,000 practices currently working 
with their local QIO treat a significant number of underserved 
    QIOs begin by examining the practice's readiness, which includes 
reviewing and developing the practice's culture and leadership, 
financial planning, systems and infrastructure needs, functionality 
requirements, workflow issues, and more. QIOs then offer assistance 
throughout the adoption continuum in areas including:

      Developing a project plan and timeline
      Hardware and infrastructure needs
      Resources for system comparisons and selection, including 
site visits and access to EHR selector tools
      Functionality requirements and preferences
      Contracting principles and guidelines Workflow mapping 
Change management and preparation
      Strategies for handling existing data
      Planning for appropriate staff training
      Guidelines for system maintenance and availability
      Go-live planning
      Optimal use of the software
      Reporting quality data
      Quality improvement processes and tools

    QIO assistance does not supplant vendor assistance--QIOs do not 
provide technical support for installation, programming, interface 
development, application training or troubleshooting software and 
hardware glitches. QIOs remain vendor neutral, although they do inform 
practices about vendors that either currently have or are planning to 
have the ability to extract a specific quality performance measure set 
from the EHR.
    The performance measures that comprise this measure set are those 
that have the greatest impact on the Medicare beneficiary population, 
including heart disease, diabetes, hypertension, heart failure and 
preventive measures. These measures--known as the Doctor's Office 
Quality (DOQ) measures--were developed in concert with the American 
Medical Association, the National Quality Forum and others.
    Practices that report the DOQ measures will be able to receive from 
their QIO customized reports on the quality of their patient care. QIOs 
can then work collaboratively with the practice to identify and 
implement strategies for making any necessary changes to workflow or 
care processes to improve on the performance measures.
    Using HIT beyond patient care to report data, measure quality, and 
undertake improvement will give participating physicians a major leg up 
on what is likely to be the future of health care reimbursement--pay-

    A recent report from the Institute of Medicine noted, ``. . . it is 
clear that a large need exists to help providers improve their quality 
of care and that the QIOs can help meet this need.'' The report goes on 
to recommend that ``The QIO program must become an integral part of 
strategies for future performance measurement and improvement in the 
health care system.''
    Experience in community-based quality improvement shows that it is 
not enough to simply measure quality, or to publicly report quality 
data. It is unlikely even payment incentives will be sufficient to 
produce the results Congress and the public are demanding. A 2004 
Health Affairs study by Rosenthal et al reviewed several incentive 
programs, concluding that ``aligning providers' financial incentives 
with quality goals may be a necessary precursor to improvement, but it 
is probably not sufficient. Rather, quality programs should be viewed 
as part of a broader strategy of promoting health care quality through 
measuring and reporting performance, providing technical assistance and 
evidence-based guidelines, and, increasingly, giving consumers 
incentives to select higher quality providers and proactively manage 
their own health.''
    Quality does not improve on its own--it takes hard work. 
Physicians, nurses, pharmacists and others benefit from help 
identifying the cause of quality gaps and then learning how to 
implement proven techniques to close those gaps. QIOs offer the only 
nationwide field force of experts dedicated to understanding the latest 
methodologies in quality improvement and working with doctors and other 
professionals at the local level to use those techniques effectively. 
Their hands-on local assistance will be key to helping physicians 
succeed under future pay-for-performance or value-based purchasing 
    There is evidence that working with health care professionals 
accelerates the rate of improvement. The 2005 AHRQ National Healthcare 
Quality Report shows that health care providers working with their 
local QIO improved at a faster pace than those who did not. In two 
areas of care, heart attack and pneumonia, the improvement rate was 
four times the rate of all other measures nationally. Improving the 
quality of heart attack and pneumonia care saves both lives and money.
    The primary role for QIOs in pay-for-performance is to support 
providers through technical assistance and the provision of evidence-
based guidelines. We agree with the IOM's finding that QIO assistance 
must be a central part of future performance improvement initiatives 
because it reflects our experience that success in quality improvement 
happens faster when doctors work in partnership with experts who 
understand cutting-edge improvement techniques.
    Our work with physicians to adopt and use HIT effectively also 
provides three key lessons that are relevant to the pay-for-performance 
dialogue: First, successful adoption and effective use of HIT improves 
the quality of care and therefore better positions health care 
providers for financial success under pay-for-performance.
    Second, EHR vendors tell us that it is easier for them to work with 
a physician who has also worked with the QIO because the practice is 
better prepared and thus more likely to succeed. Increasing the number 
of physicians who successfully and efficiently adopt EHRs can help 
motivate change in others and accelerate the pace of EHR adoption 
    Third, successful EHR adoption helps build the electronic 
infrastructure for data collection. This infrastructure is key to 
successful incentives programs because claims data alone--which largely 
reflect processes of care and not outcomes of care--do not provide a 
full picture of patient self-management or care quality overall. Data 
collection from EHRs is potentially more accurate and provides a better 
picture of the true quality of care.

Interconnected Health Care:
    The most complete picture of patient care will not come from EHRs 
alone, but from an interconnected health care system where authorized 
providers have access to secure, accurate and comprehensive patient 
information at the point of care, in real time. I know that the 
Chairwoman has been a long-time champion of efforts to mobilize data 
across institutions in the health care system, and we support your 
efforts to move this promising field forward.
    Quality measurement and reporting, combined with improvement 
assistance, are well known strategies for improving care. Yet the 
ability of providers to perform at the highest levels of excellence 
often depends on clinical data that are stored in disparate 
organizations across the health care system. Health Information 
Exchange (HIE) can help accelerate efforts to improve quality, safety 
and efficiency by delivering more comprehensive information about the 
patient at the point of care. Availability of this critical information 
is an important tool to help us address medical errors, such as the 
dispensing of contraindicated prescriptions by two separate physicians 
treating the same patient.
     I am pleased to share with you today findings from a recent report 
from the American Health Quality Foundation and the eHealth Initiative 
which finds that QIOs in 41 states and the Virgin Islands are currently 
supporting local, regional, and statewide initiatives to develop health 
information exchange networks, many in leadership roles.
    QIOs are convening stakeholders and helping communities reach 
consensus on the goals, operations and functions of HIE initiatives. 
This is an especially valuable role for QIOs because of their 
experience and relationships in all settings of care. For example, to 
date, nursing homes and home health agencies often have not had a 
meaningful role in many local HIE initiatives, and yet these entities 
would benefit significantly from both HIT adoption assistance and 
community-based HIE. QIOs are leading the way in bringing diverse 
stakeholders together across communities so that all health care 
interests are engaged in a common agenda.
    Many QIOs are participating in governance of these emerging HIE 
entities, and several are also helping their communities develop 
policies for information sharing, sustainable business plans and 
technical infrastructure. The report finds that, because of their 
structure, function, history and expertise, QIOs are helping accelerate 
the formation of these HIE networks.

Future QIO Assistance
    As I've outlined today, the field force provided by QIOs offers 
health care providers in every state free and needed assistance for 
improving quality. From supporting and accelerating physician adoption 
of EHRs to working with nursing homes, hospitals, home health agencies 
and others, QIOs are helping health professionals utilize the latest 
techniques in quality improvement to eliminate medical errors, reduce 
suffering and improve the quality of life for patients across the 
    Recent studies from RAND and others tell us that Americans get only 
about half of the recommended care for their medical conditions. As 
HIT, pay-for-performance and health information exchange increasingly 
become vital tools for transforming quality, all providers will need 
performance improvement assistance from quality experts like QIOs.
    The QIO program represents the largest coordinated federal 
investment in improving health care quality--right now, that investment 
accounts for less than one tenth of one percent of overall Medicare 
spending. As Congress considers legislative action to realign 
incentives through pay-for-performance in support of health care 
quality and accountability, we hope you will encourage the expansion of 
this invaluable program to become a central fixture in our collective 
drive to provide the right care to every patient, every time.


               Statement of Community Clinics Initiative

    This statement is submitted for the record on behalf of the 
Community Clinics Initiative (CCI), a unique collaboration between the 
Tides Foundation and The California Endowment, that began in 1999 to 
provide resources, evidence-based programming and evaluation, education 
and training to support community health centers and clinics. Through 
information sharing and major grants, CCI acts as a catalyst to 
strengthen California's community clinics and health centers to improve 
health outcomes in underserved communities. The state's community 
clinics offer high quality, low- and no-cost care, often in rural and 
inner city areas, providing a lifeline for millions of uninsured and 
underinsured Californians.
    Over the past 5 years, CCI has invested close to $48 million to 
support Community Clinics and Health Centers throughout California to 
strengthen their information management capacity for more effective use 
of technology tools to improve business efficiencies, improve patient 
health outcomes, and advocate for health needs in communities 
throughout the state. Over time, CCI has funded and supported through 
technical assistance, the development of basic technology systems in 
clinics, such as software, hardware, connectivity, staffing and 
training to more than 90% of clinics and health centers.
    We would like to share with you information about our work in 
California and we share the lessons that we have learned in the hopes 
that they can help inform the national conversation around HIT.
    Through programs and grants in technology, capacity building and 
leadership, CCI ensures that clinics remain vital partners in building 
healthier communities. Grantees encompass 90 percent of California's 
community clinics and regional consortia, securing CCI's role as a 
major player in the field. Individual awards enable clinics to convert 
to electronic medical recordkeeping, improve or expand patient 
facilities, use software to share data among clinics in a network, or 
train its staff in fundraising. These enhanced capabilities allow 
clinics to better track health status, care for more patients, achieve 
diverse revenue sources, reduce administrative costs, expand 
opportunities for shared learning and collaboration or advocate for 
community health needs.
    It is clear that patient safety, health care quality (especially 
for populations with chronic diseases), efficiency, and cost savings 
can be improved through the effective use of clinical information 
technology. And, while technology alone cannot address all of the 
quality and efficiency problems, its adoption is associated with 
changes in how care is provided.
    As community clinics and health centers have become more technology 
``savvy'' and the capacity in clinics, for data collection and data 
analysis more mature, we see the potential for the proliferation of 
technology enabled quality improvement in the field.
    The California experience has taught us a lot about what it takes 
for community clinics and health centers to successfully implement HIT. 
We also are learning that when they have the appropriate resources and 
support, community clinics can be leaders and innovators in using 
technology to improve health outcomes.
    As we observe the increasing momentum for HIT at the federal level, 
we find that appropriate understanding and consideration of the unique 
HIT needs of community clinics are not being addressed. Unless careful 
attention is paid to realistic HIT strategies for these clinics, we are 
at risk for having HIT increase rather than decrease the disparities in 
care. We need to take steps to ensure that the patients in community 
clinics have the same benefits of technology that will be available to 
patients outside the safety net.
    Most important is the need for creative strategies to finance the 
significant up front investment costs for HIT in clinics. Current 
strategies promoted by the Administration and spearheaded by Dr. David 
Brailer are market driven and rely heavily on the private sector and 
assumed return on investment. While there is skepticism about this 
approach for the broad health care universe, it seems clear that 
reliance on these market forces will certainly fail community clinics. 
We believe that there is little if any financial return on these 
investments for CCHC's, and in fact, most will incur financial losses 
and potentially even see a decrease in access if resources are diverted 
to pay for these systems. We already know that the financing mechanisms 
of community clinics, which rely heavily on Medicaid reimbursement and 
public grant programs, make direct return on investments for clinics 
unlikely. If cost savings do occur, they occur downstream from the 
clinic, benefiting hospitals and payers such as Medicaid through lower 
costs for acute care, in-patient stays and emergency room visits.
    As interest in new HIT legislation in the Congress grows, we would 
ask you to keep in mind several important opportunities:

      We need mechanisms to ensure that cost savings are driven 
back upstream to the clinics to help fund HIT investment.
      It seems logical that the HIT and the Medicaid debate be 
joined. Investments in HIT have the potential to make the delivery of 
community based health care more efficient and to improve health 
outcomes through the improvement of quality of care.
      Funding for technology must be based on the true costs of 
technology innovation. As we have described, the costs of hardware and 
software are only a small portion of the true organizational costs. 
Some estimates suggest the cost of EHR implementation ranges from 
$20,000-$50,000 per physician.
      Most current legislation suggests special attention be 
given to specific classes of providers, such as private practices. We 
encourage you to grant similar status to community based clinics.
      Many HIT bills propose establishing loan funds to finance 
HIT investment. While loan funds have the potential to be important 
resources for community clinics, they must be structured to address 
clinics' unique financing and reimbursement mechanisms. Specifically, 
grant funds should be made available to finance the up-front costs 
necessary for planning; underwriting criteria must take into account 
the financial structures of clinics and payers such as Medicaid need to 
recognize ongoing IT costs and debt service payments in setting 
reimbursement rates.

    We hope you will use CCI as a resource in the days and months 
ahead. Because of the work we have done, we have the experience and 
resources to be good partners in this conversation around HIT. And we 
hope together we can reach safety net communities in clinics and health 
centers to bring HIT into their lives and improve their level of care.
    Should you have any questions, please contact:
    Ellen Friedman, Vice President and Managing Director or Jane 
Stafford, Senior Program Officer, Community Clinics Initiative


               Statement of Gregory C. Simon, FasterCures

    FasterCures is pleased to have this opportunity to participate in 
the conversation on the importance of health information technology 
(IT) and on public and private efforts to increase the adoption of 
health IT. We appreciate the continued interest in this field by this 
Subcommittee. We especially applaud you, Chairman Johnson, for the 
leadership you have demonstrated over many years in championing the 
establishment of a national interoperable health information 
    We share the goal of improving the quality and efficiency of 
healthcare in the United States through the widespread adoption of 
interoperable health information technology. Indeed, there is general 
agreement that electronic medical records will reduce healthcare costs, 
avoid medical errors and improve patient care. Each one of those issues 
is important. But the real savings, both in healthcare costs and, more 
importantly, in eliminating human suffering, will come from curing 
disease and saving lives. At FasterCures, we believe we must link care 
to cures--and that the use of electronic medical records data in 
research is critical in that effort.
    FasterCures is a nonpartisan, nonprofit organization whose goal is 
to save lives by saving time in the discovery, development, and 
deployment of treatments and cures for deadly disease. We are 
independent of any interest or industry groups. Our mission is to 
evaluate the current system of medical research; to identify 
inefficiencies, misplaced priorities, and conflicting incentives that 
inhibit the pace of discovery and development; and to propose and 
pursue improvements to the existing system. We seek to enhance and 
accelerate the efforts of those creating and overseeing the creation of 
safe and effective treatments and cures: health, research advocacy, and 
funding organizations; scientists; medical professionals; policy 
professionals; clinicians; and patients themselves.
    The current clinical care and biomedical research infrastructures 
operate largely independent of one another. Clinical and biomedical 
researchers generally cannot access data collected in the clinical care 
process for use in studying the origins and course of disease. 
Similarly, data that are collected on a patient in a clinical trial 
generally do not become part of a patient's medical record. In other 
words, potentially life-saving research results do not flow rapidly 
from ``bench to bedside,'' and real life healthcare outcomes and 
observations that should be shaping the next generation of biomedical 
research flow back to the ``bench'' even more slowly, if at all.
    The development of the Nationwide Health Information Network and 
the broader use of health IT present a unique opportunity to accelerate 
the search for cures. We can do so if we take steps during the initial 
phases of standards development and system design to enable the 
research use of information collected in the patient care process. 
After all, we don't want to build a new superhighway of health 
information and then have to dig it up in a few years to make it 
capable of supporting research needs.
    In order for that to happen, the vital, yet often too narrow, focus 
of the NHIN to support healthcare delivery must be expanded to support 
the entire healthcare continuum, including health research.
    The ability of researchers to access and analyze the clinical 
information contained in millions of medical and personal health 
records, with appropriate privacy and human subject protections, could 
speed the discovery of new therapies beyond anything imaginable today. 
A system that supports data sharing from care settings to the 
researcher also can support dissemination of results from the 
researcher to the practitioner and the patient, thereby speeding the 
translation of research results into clinical practice. I do not want 
to diminish the importance of ensuring that safeguards are in place to 
ensure patient privacy protections. But we should not let fears alone 
prevent us from recognizing the tremendous research potential of 
electronic medical records.
    The potential benefits of a research-inclusive EMR system would be 
to speed clinical trials by quickly identifying potential enrollees; 
enhance the monitoring and identification of adverse drug reactions, in 
effect creating ``virtual clinical trials'' of thousands of patients to 
study the impact of approved drugs; permit the early identification of 
public health threats; provide the research community access to a 
broader and more diverse patient population; detect patterns of health 
and illness in a given population; and help researchers form hypotheses 
about disease initiation and progression.
    In our report ``Think Research: Using Electronic Medical Records to 
Bridge Patient Care and Research,'' we examined the current landscape 
of electronic medical records databases and profiled some of the 
innovative health systems that are pioneering the use of EMRs as a 
research tool. Because we know there is a long way to go before EMRs 
can be widely used in research, several institutions and government 
agencies have forged ahead to find ways to meld clinical data with 
research goals. These institutions include:
      Mayo Clinic: Rochester, Minnesota. The Mayo Clinic has 
converted completely to an EMR system as of July 2004 and has been 
using paper-based medical records in research for more than 80 years. 
Mayo conducts more than 4,000 clinical trials each year, and nearly 
every trial relies on information from medical records. In addition, 
researchers from IBM and Mayo are using supercomputing technology and 
applying customized algorithms, data mining, and pattern recognition to 
uncover correlations between particular proteins, genetic markers, 
patient outcomes, and other factors that could lead to new diagnostics 
and treatments.
      Regenstrief Institute: Indiana University School of 
Medicine. Over the past three decades, Regenstrief has developed one of 
the nation's first EMR systems, along with the nation's only citywide 
EMR system, which allows doctors in emergency rooms to view as a single 
record all previous care at any of 11 hospitals. The records have been 
useful for prospective, retrospective, epidemiological, longitudinal, 
and cohort studies, and for enhancing clinical trials data sets.
      All Veterans Health Administration medical centers have 
EMRs. Although VHA's computerized record activity began in the late 
1970s, it has evolved over time to become VistA, VHA's current health 
information system. As a consequence of VA's comprehensive use of 
medical information technology, a wide variety of electronic databases 
have been created, many of which include patient-specific clinical 
information that could be used for research purposes. VA researchers 
routinely access these databases as well as patient records (with 
consent) primarily to conduct health services research.

    To make the best use of medical records data in research, we need a 
national effort that builds on and goes well beyond the work of the 
pioneering institutions noted in the report. That is why we have been 
working with leaders of organizations dedicated to realizing the 
healthcare and health research benefits of information technology 
through the creation of the NHIN. On May 9th, FasterCures is co-hosting 
with the National Center for Research Resources at NIH and the Agency 
for Healthcare Research and Quality an expert meeting to develop an 
action agenda for the inclusion of clinical research in the NHIN.
    In order to integrate research needs into the development of the 
NHIN, there must be a framework for defining the characteristics and 
development priorities of the research-enabling network. Working with 
representatives from the Markle Foundation and the National Cancer 
Institute, FasterCures developed the following Guiding Principles as a 
starting point for such a framework.

1) Enable Bi-Directional Data Exchange
    The NHIN should support access to health information and healthcare 
data collected in the course of routine medical care and from other 
sources to improve research capabilities. Similarly, it should support 
widespread access to research data to improve health and healthcare.

2) Encourage Optimum Use of Phaient Data
    The NHIN should provide incentives to promote and facilitate the 
broadest and most effective use of patient care data in clinical 
research and ensure that clinical research results be widely available 
and integrated into decision-support tools to benefit patient care and 
improve personal health decisions.

3) Facilitate Collaborative Research
    The NHIN should have the capability to serve as a broadly enabling 
research infrastructure that promotes the sharing and reusing of 
clinical research results to facilitate collaborative research.

4) Require Common Data Standards
    The NHIN should require that a single set of standards be developed 
and adopted for the collection and exchange of data across all health 
communities, including the research community.

5) Create a Network of Networks
    The NHIN should support a federated and interoperable system that 
links to pre-existing and future networks, creating a ``network of 

6) Be Technology and Content Independent
    The NHIN should be designed with the flexibility to respond to the 
evolution of technology, which creates potential new sources and uses 
of data.

7) Safegaurd Privacy and Assuring Informed Consent
    The NHIN must be capable of ensuring compliance with appropriate 
requirements for patient privacy, informed consent, and 
    It has been nearly two years since the President Bush established 
the Office of the National Coordinator of Health Information Technology 
(ONCHIT) and called for the widespread adoption of electronic health 
records by 2014. Those announcements, and the continued leadership of 
the President, Secretary Leavitt, Dr. David Brailer and key members of 
Congress on this Subcommittee and beyond, have catalyzed a more 
organized federal effort to foster a national health information 
infrastructure to make our healthcare system more efficient and 
effective. Now, it's time to make sure that health cures are integrated 
into this process as well. This linkage of care to cures is vital to 
realizing the promise of accelerating clinical and biomedical research 
to alleviate pain, suffering and death for millions of people.
    Again, thank you for the opportunity to present testimony today. 
And thank you for your continued efforts on behalf of America's 


        Statement of Mr. Raj Toleti, Galvanon, Maitland, Florida

    Madam Chairwoman and distinguished members of the Subcommittee, 
thank you for inviting Galvanon to submit a formal statement for the 
record on the important topic of using patient self-service technology 
to reduce costs and improve patient care.
    I am Raj Toleti, president of Galvanon, a subsidiary of NCR 
Corporation. Galvanon provides a suite of patient self-service kiosks 
and Web applications that streamline patient interactions throughout 
the continuum of care. Our products are designed to help physician 
groups and hospitals improve workflow, minimize errors and reduce 

    In today's fast-paced healthcare industry, electronic information 
management is a crucial tool that has great potential to improve 
patient care by reducing medical errors, ensuring accurate patient 
identification, streamlining clinical workflow and facilitating 
physician access to critical patient health data. Patient self-service 
applications reduce costly paper-based processes and increase the 
accuracy of patient data by creating a seamless flow of information 
from patient check-in through treatment and beyond. Automating the 
patient registration process eliminates potential errors that stem from 
redundant data entry while also reducing healthcare costs. Implementing 
a national healthcare information structure that includes the 
widespread adoption of patient self-service applications will 
complement the use of electronic health records and produce enormous 
benefits in the quality and effectiveness of patient care.
    From our experience, we believe the value of collecting data from 
the patient as early as possible in the treatment process and 
empowering them to ensure the data is accurate cannot be overstated. 
Data collection at patient check-in is proven to reduce patient 
identification errors, medical errors and costs related with 
duplicative administrative work.
    Allowing patients to review, verify and modify their information 
before it is processed by the healthcare organization benefits patients 
and providers alike. Providers have access to clean data that enable 
them to provide the highest possible standard of care and reduces the 
risks associated with incorrect or inaccurate information. Patients 
receive the most appropriate medical care and are not burdened with 
challenges associated with delayed medical payments due to claims 
processing errors.
    Today, more than 50 leading-edge healthcare organizations around 
the county are using a patient self-service approach for everything 
from eliminating redundant paperwork to speeding the development of 
experimental cancer treatments. These comments seek to explain how 
patient self-service applications can reduce healthcare costs while 
complementing the adoption of electronic health records nationwide.

Reducing paperwork and administrative costs
    As the healthcare industry begins to embrace the broader use of 
information technology such as electronic medical records and practice 
management systems, the patient registration process has remained 
paper-based. As a result, gathering vital information from patients at 
check-in, including demographic, insurance and medical history 
information, continues to be a cumbersome and labor-intensive process. 
Patients must complete stacks of paper forms, which staff members must 
then re-key into the organization's information system. The result is 
sluggish productivity, increased wait times and the increased 
likelihood for error.
    By using patient self-service technology to automate this process, 
healthcare providers can dramatically improve service to patients while 
also increasing safety, efficiency and accuracy. Patients can check-in 
for appointments, sign forms electronically and make co-payments, 
helping to reduce paperwork and the costs associated with printing, 
managing and storing paper forms. Along the way, all patient 
information is securely captured and stored to ensure HIPAA compliance.
    For example, HOAG Hospital Women's Pavilion in Newport Beach, 
California, implemented patient self-service technology and their 
patients now fill out 4-6 fewer paper forms and experience shorter wait 
times. The same holds true at Newark, New Jersey-based Newark Beth 
Israel Medical Center where patient check-in time has been reduced by 
25% for new patients and by 75% for existing patients. The medical 
center, which handles 300,000 patient visits a year, has been able to 
reduce the amount of time its staff members spend managing paper forms 
by 50%. This extra time frees up staff members to focus on patient-
related questions and concerns.

Seamless flow of patient information throughout the healthcare 
    To further improve electronic health information management, all of 
the information captured during the automated patient check-in process, 
including medical history data, is automatically stored in an 
organization's clinical data repository or electronic medical records 
system, eliminating the need for staff to manually re-enter data and 
reducing the risk of clerical errors. This capability also gives 
providers quick and easy access to the information they need to 
effectively treat patients. For example, when patients are routinely 
asked to update their allergies and medications at each visit, their 
providers know which treatments or medications to avoid, such as those 
that may result in dangerous drug interactions.
    Without the need to manually enter data from patient forms into the 
organization's information systems, overall efficiency also increases, 
giving staff members more time to educate patients about conditions, 
medications, treatments and surgeries. This helps to make patients more 
active participants in their own care, a key objective as the industry 
moves toward the implementation and use of consumer-directed healthcare 
plans, like health savings accounts, where patients bear a greater 
responsibility for their health choices.
    Many healthcare organizations also use self-service technology to 
ensure that the proper consent forms have been signed and that patient 
communications conform to HIPAA guidelines. Once signed, these forms 
can be passed along to an electronic medical record or other electronic 
imaging and storage system, helping to reduce liability and the costs 
associated with managing a paper-based consent process.
    The use of patient self-service technology also streamlines the 
process of collecting secure Medicare documents and Medicare related 
information from patients at the point of service. Medicare forms such 
as Medicare Rights, Advance Beneficiary Notice and the Medicare 
Secondary Payer Questionnaire can be presented to patients on a self-
service platform with minimal staff intervention. Through the 
application of adaptive questionnaire technology, patients are 
presented with these forms and questions dynamically, easing the time 
it takes staff to collect and explain this information. Staff can set a 
range of workflow conditions, which may include the patient's insurance 
type or financial class, along with the hospital or clinic service code 
for the particular visit.
    In addition, Galvanon's self-service technology can integrate 
directly with a number of automated medical necessity checking 
applications to further augment a healthcare organization's existing 
necessity checking workflow. This process greatly improves the patient 
experience, alleviates much of the staff workflow surrounding Medicare 
related forms collection and helps reduce claim denials and the rework 
associated with re-submitting medical claims.

Speeding development of experimental treatments
    Earlier this year, Galvanon introduced a new module to our 
MediKiosk product that streamlines the collection and analysis of 
patient data for use in clinical trials. By using this module, research 
facilities can automate clinical surveys and questionnaires through 
adaptive screening technology that generates additional questions based 
on previous patient responses. This approach to gathering patient 
information allows research facilities to tailor the clinical intake 
process for each patient, increase the quality of data collected, 
improve subject recruitment for clinical trials and minimize the need 
for costly, time-consuming paper forms.
    Tampa, Fla.-based H. Lee Moffitt Cancer Center and Research 
Institute, one of the Southeast's leading cancer treatment and research 
facilities, is currently using this new module to collect medical 
histories, clinical records, and blood and tissue samples from 
thousands of patients in an effort to expedite the time it takes to 
bring experimental therapeutics and other clinical trials to market.

Enhancing screening process
    Self-service technology can also be used to facilitate clinical 
screenings that promote the delivery of preventive care services. At 
Columbus, Ohio-based Columbus Children's Hospital, 10 pediatric-based 
primary care clinics have implemented self-service technology to 
automate a self-report adolescent screening program for at-risk 
behavior. Upon arrival at the facility, patients use the touch screen 
interface on the self-service device to complete a health risk 
assessment questionnaire concerning their use of alcohol and drugs, 
symptoms and impairments for co-morbid mental disorders and other at-
risk behaviors such as suicide ideation and depression.
    Within seconds of survey completion, the self-reported results are 
summarized, scored using pre-defined algorithms, stored in the 
patient's lab result and made available to physicians during the same-
day office visit. Having access to this personalized assessment 
information allows physicians to provide tailored advice and conduct 
interventions that are more likely to change patient behavior. In fact, 
one provider indicated that this screening process resulted in a 
patient who screened positive for depression breaking down during the 
appointment. As a result, the provider was able to address the issue 
immediately and connect the patient with the appropriate services.
    The automated screening process has been shown to make adolescents 
more comfortable revealing information related to at-risk behavior 
because of the enhanced level of privacy it provides. Columbus 
Children's Hospital uses this approach to screen more than 200 patients 
each month and to coordinate further research and follow-up activities, 
such as continued telephone support services that are consistent with 
the treatment regimen. As a result, providers have the tools they need 
to strengthen relationships with patients and establish an ongoing 
dialogue that promotes compliance with the prescribed plan of care.

Improving access for non-English speaking patients
    As the American population continues to become more diverse, 
language barriers can present a serious challenge for non-English 
speaking patients seeking care. In fact, according to a recently study 
published by the Commonwealth Fund, approximately 45 million U.S. 
residents speak a language other than English at home. Patient self-
service technology can help eliminate language barriers by offering 
check-in services in multiple languages.
    Both Harlingen, Texas-based Valley Baptist Healthcare System and 
Newark Beth Israel Medical Center offer patient check-in in both 
English and Spanish. By allowing patients to register in the language 
they prefer, the quality of the data collected increases dramatically.
Minimizing fraud through accurate patient indentification
    Santa Barbara, Calif.-based Cottage Health System equipped its 
patient self-service kiosks with biometric fingerprint imaging 
capabilities to instantly and accurately identify patients during the 
check-in process. Upon arrival at the facility, patients have the 
option of providing a thumbprint or swiping a driver's license, credit 
card or membership card directly on the kiosk to begin checking-in. In 
addition to helping ensure accurate patient identification for patient 
safety purposes and minimizing the potential for duplicate patient 
records, the technology also helps Cottage to minimize Medicare and 
Medicaid fraud.
    In conclusion, we strongly support the greater use of information 
technology and are committed to further leveraging the benefits of 
patient self-service technology to address some of healthcare's biggest 
challenges, from reducing administrative costs to improving quality of 
care. By working together with our comprehensive network of healthcare 
information technology partners, we feel we will be able to establish 
the most effective, efficient methods for gathering patient information 
and making it available to providers throughout the continuum of care.
    The key to a successful self-service strategy lies in the 
integration with existing IT infrastructures--such as electronic 
medical records systems and clinical data repositories--so healthcare 
organizations can expand this strategy throughout the enterprise to 
achieve true clinical excellence. Whether identifying patients at 
check-in or improving provider access to patient information, a 
successful technology strategy will ultimately impact every step of the 
care process.
    Again, I believe that combining patient self-service applications 
with electronic health records can dramatically improve the quality and 
safety of healthcare today while also helping to reduce rising 
healthcare costs. I urge Congress to consider the benefits of patient 
self-service applications, described above, and promote the development 
and adoption of this valuable and cost-effective technology.
    Thank you again, Madam Chairwoman for the opportunity to submit a 
formal statement for the consideration and records of the Subcommittee. 
I am prepared to answer any questions you may have.


    Statement of Greenway Medical Technologies, Carrollton, Georgia

    Thank you very much Chairman Johnson and distinguished members of 
the Subcommittee and staff. My name is Justin Barnes and I am the Vice 
President of Marketing and Government Affairs for Greenway Medical 
Technologies, a leading provider of integrated electronic health record 
(EHR) and practice management software solutions for physicians' 
practices. It is always a great honor and pleasure to work with members 
of Congress and their staff as I believe we all have a common goal to 
shape the new face of the healthcare industry by utilizing the vast 
contributions that information technology (IT) offers healthcare 
providers, payers, physicians and patients in achieving goals of 
reduced medical errors, lower costs, better quality and improved 
efficiency within our nation's healthcare system.
    In addition to representing Greenway, I am also one of the founders 
of the HIMSS Electronic Health Record Vendor's Association (EHRVA) and 
currently reside on the EHRVA Executive Committee and serve as Chair of 
the Membership Committee. The EHRVA is comprised of the nation's 39 
leading EHR companies currently representing roughly 98% of all EHR's 
implemented today. The goals of Greenway and the EHRVA are the same as 
those of President Bush in terms of developing an industry-wide 
strategy for widespread adoption of health information technology (HIT) 
and for converting these goals into substantial quality and efficiency 
improvements in less than five to eight years from now.
    This Statement focuses on our dedication to assisting Congress and 
government agencies in achieving our health transformation goal. 
Greenway and the EHRVA support a truly transparent process and equal 
collaboration of public and private entities. Over the past year, 
Greenway and the entire private sector has made significant strides in 
EHR adoption, interoperability and proven return on investment (ROI) 
for long-term sustainability of this transformation progress and we 
will continue to make strides in this reform. We have been successful 
so far without government intervention or the wasting of any taxpayer 
dollars. Greenway's customer practices alone have realized an annual 
$21,600 to $81,500 post-implementation return per physician. With 
paperwork reduced, collections increased and coding improved, 
physicians provide a higher quality of care and also operate a more 
efficient business.
    While HIT and EHR adoption currently grows at a record pace, we 
possess the responsibility to ensure that every policy that is enacted 
and every rule that is proposed must increase and incentivize HIT 
adoption. While we applaud the focus that the President, Congress and 
the U.S. Department of Health & Human Services have applied to this 
industry transformation, we must ensure that all decisions are created 
by entities that have the essential experience, dedication and factual 
evidence necessary to put self-sustaining plans and policy in place.
    Greenway guardedly supports the efforts of the Office of the 
National Coordinator for Health Information Technology (ONCHIT) but 
believes this Office needs more private sector experience and 
involvement to create a real 50/50, public/ private collaboration. In 
ONCHIT's current state, Greenway could not support their codification 
until their processes become more transparent, physicians point-of-care 
workflow is respected and EHR certification performs the proper due 
diligence that is necessary for participation and private sector 
sustainability. We respectfully advise that all Work Groups, Committees 
and Boards created under ONCHIT and the American Health Information 
Community (AHIC) make sure that any mandates or certifications are 
thoroughly investigated, meticulously created and are proven to 
increase HIT adoption before becoming imposed on the private sector. It 
is essential that we continue to increase our HIT adoption rates and 
keep physician's daily workflow at the forefront of all decision-making 
in this reform and not succumb to any industry or self-serving lobby.
    Greenway is one of several examples of how the private sector is 
committed to this transformation and has taken charge through leading 
the health information technology and electronic health record 
industry. Greenway was founded on the premise that HIT & EHRs 
dramatically reduce medical errors, lower costs, improve quality and 
efficiency and create a substantial return on investment for physicians 
and practices among many other constituencies. Greenway has chosen to 
focus on the small to mid-size practice community as our customer base 
consists primarily of practices with between 1-50 physicians. The vast 
majority of healthcare in this country is delivered in medical offices 
within the above mentioned market space and this environment will be 
the essential component in assuring widespread adoption due to the 
communication these practices have with hospital systems, test 
laboratories, and other medical practices.
    Greenway has also structured its offerings to physician practices 
into a 10-year business plan mirroring President Bush's own Framework 
for Strategic Action to ensure that healthcare providers will have 
quality software solutions that inform clinical practices, interconnect 
clinicians, personalize patient care and improve the overall population 
health. By directing our efforts in accordance with those of the 
president, our customers can rest assured that their investment will 
consist of a fully-integrated solution streamlining their 
administrative, clinical and financial processes into an efficient 
workflow that is consistent with long-term viability.
    Besides having the best EHR for their practice, it is also 
Greenway's belief that physicians need fiscally responsible incentives 
to increase adoption of HIT at a greater pace. Physicians and their 
practices are the backbone of the American healthcare system and since 
they are also small businesses, they are the backbone of our economy as 
well. Congress and the healthcare industry needs to stay focused on 
economic sustainability by providing fair, increased reimbursement 
incentives and by increasing the capital equipment and software 
purchase deductions allowed under section 179 of the Internal Revenue 
    However, from our decades of experience, we would not support 
unfunded government mandates, stark-safe harbor modifications or, as 
mentioned previously, imposed HIT certifications that are not proven to 
considerably increase EHR adoption, EHR usability and private sector 
sustainability. We would suggest any proposed changes in these areas 
get referred to a congressional or Medicare study to review and 
understand feasibility, longevity and factual impact on HIT adoption 
goals. Congress and the U.S. Department of Health & Human Services 
possess the ability to cripple current and future HIT and EHR adoption 
if they implement immature or flawed policy.
    In all that we are working towards, we must also recognize 
physicians as consumers and realize and respect the necessity of their 
services. As absurd as it sounds, can you imagine a community without a 
physician? Their contribution to each community makes it essential that 
we offer solutions such as EHRs and proper public policy to help keep 
them in business. It is our experience that we must keep the physicians 
daily workflow at the fore-front of all decision-making when discussing 
how we may impact their offices and practice of medicine. The practical 
workflow involved in a physician's revenue pipeline is more paramount 
in EHR selection than any non-essential bells and whistles that might 
influence a physician's purchasing decision. Greenway and the EHRVA 
both have presented Use Cases and ``Clinical Test Scenarios'' to 
various Work Groups of the Certification Commission for Health 
Information Technology (CCHIT) and Health Information Technology 
Standards Panel (HITSP). These Use Cases and Scenarios were derived 
from real-life experiences with EHRs implemented today at the point-of-
    This is an exciting time to help lead the healthcare information 
technology industry. We have the opportunity to create the most 
efficient healthcare system for this country and while this is a 
daunting challenge, it is certainly achievable. However, as we continue 
to move towards 2014, we want to take the prudent and fiscally 
responsible steps so that our healthcare vision will transform into a 
national reality. Speaking on behalf of the private sector, we are 
ready as an industry to answer the call to work in partnership with 
Congress and federal agencies in making these goals and the framework 
our future.
    Chairman Johnson and distinguished members of the Subcommittee and 
staff, I want to thank you for this opportunity and your genuine 
interest in this vast and important topic. I hope that my comments will 
help steer ideas and thoughts that can be transmitted into innovative 
policies shaping the future of healthcare in this country. Thank you 
very much.


   Statement Mary Griskewicz, Healthcare Information and Management 
                 Systems Society, Alexandria, Virginia

    Madame Chair, Congresswoman Johnson, and distinguished members of 
the Subcommittee, I am honored to submit this statement for the record. 
My name is Mary Griskewicz and I have the pleasure of serving as the 
2005-2006 Chair of the Healthcare Information and Management Systems 
Society (HIMSS) Advocacy & Public Policy Steering Committee. I live in 
Connecticut and work professionally for GE Healthcare, Global Marketing 
Director of Industry and Government Affairs.
    HIMSS is one of the largest healthcare IT trade associations, 
representing over 17,000 individual members and the 280 corporate 
members who employ more than 1.2 million people across the United 
States. On behalf of HIMSS members and the thousands of professionals 
in the healthcare IT community, we commend you and the members of the 
Subcommittee on Health for your leadership in promoting initiatives 
that increase the use of information technology throughout the 
healthcare industry. HIMSS' vision is to advance the best use of 
information and management systems for the betterment of healthcare. 
Our mission is to lead change in the healthcare IT and management 
systems field through knowledge sharing, advocacy, collaboration, 
innovation, and community affiliations.
    Saving lives and improving patient safety are major goals of the 
healthcare industry, given the high occurrence of medical errors 
resulting in up to 100,000 lives lost and up to $29 billion of costs 
each year in the U.S. alone, according to the Institute of Medicine 
report, ``To Err is Human.'' Furthermore about 3.7 percent of 
hospitalizations may be associated with error, and 13.6 percent of 
these lead to death.
    Studies have proven healthcare IT saves money and saves lives. The 
Center for IT Leadership suggests that utilizing interoperable 
ambulatory EHRs alone will save $112 billion a year, representing 
approximately 7 percent of healthcare spending. The ONC conservatively 
estimates that annual savings due to widespread EHR adoption are likely 
to range between 7.5 and 30 percent of annual healthcare spending. 
These are important savings targets as healthcare now consumes 17 
percent of our nation's gross domestic product, by far the largest 
percentage of any nation in the world.
    This month, HIMSS' Patient Safety and Quality of Care Steering 
Committee participated in the National Quality Foundation's (NQF) 
balloting for National Voluntary Consensus Standards for the Prevention 
and Care of Venous Thromboembolism (VTE). According to NQF, VTE is the 
most common preventable cause of death in hospitals. It afflicts 
900,000 Americans every year, in 500,000 people this condition advances 
to pulmonary thromboembolism (hypertension in the lungs) and results in 
death for approximately 300,000. The U.S. health IT industry is a world 
leader and this is unacceptable.
    IT has transformed every industry in America and the world and we 
can and will do the same for healthcare. Americans deserve much more 
than the current mediocre and often failing healthcare delivery system.
    There are hospitals, clinics, physician practices, and businesses 
that are using healthcare IT to save money and save lives every day. In 
fact, there are numerous success stories across the country that should 
be replicated. For example, Wayne Obstetrics and Gynecology, with more 
than 6,000 patient encounters a year, is a model of excellence for 
small provider practices in a rural setting. Based in Jessup, Georgia 
this solo practice views its EHR as a distinct asset in the volatile 
world of OB malpractice.
    We know through EHRs, standards, and legal and financial 
incentives, we can and must do better. We look forward to continuing to 
work with you and your colleagues to improve America's health system.


                                                     April 20, 2006
The Honorable Nancy Johnson
Subcommittee on Health
House Ways and Means Committee
1136 Longworth House Office Building
Washington, D.C. 20515

Dear Chairman Johnson:

    I applaud your efforts to tackle the important issue of health 
information technology in an effort to reduce medical errors, improve 
patient care, and reduce costs.
    As a follow-up to your April 6, 2006 hearing on ``Health Care 
Information Technology,'' I wanted to take this opportunity to 
highlight innovative technology that is in the process of being 
utilized at hospitals in my district. This technology, designed to help 
physician groups and hospitals improve workflow, minimize errors, and 
lower costs, is made by Galvanon, a subsidiary of NCR Corporation that 
creates solutions to streamline everyday patient interactions and 
improve patient flow through the health care process.
    Columbus Children's Hospital is using what is known as an 
``eClipboard'' to automate the screening process for the Trial of 
Automated Risk Appraisal for Adolescents (TARAA) Project, a self-report 
health screening for at-risk behavior. The TARAA project is funded by a 
grant from the National Institute on Drug Abuse and screens youth for 
their use of alcohol and drugs, symptoms and impairments for co-morbid 
mental disorders, and other at-risk behaviors such as suicide ideation 
and depression.
    Upon arrival for an appointment, patients at ten pediatric-based 
primary care centers use the touch screen interface on the tablet PC 
device to check in for appointments and complete screening 
questionnaires. Within seconds of survey completion, the self-reported 
results are summarized, scored and stored in the patient's chart, and 
the data is made available to providers during the same-day office 
visit. Having access to this personalized assessment data enables 
physicians to provide tailored advice and conduct interventions that 
are more likely to change patient behavior. In fact, one provider 
indicated that this screening process resulted in a patient who 
screened positive for depression breaking down during the appointment. 
As a result, the provider was able to address the issue immediately and 
connect the patient with the appropriate services.
    The automated screening process has been shown to make adolescents 
more comfortable revealing information related to alcohol and drug use, 
depression and other at-risk behavior because of the enhanced level of 
privacy it provides. It also gives Columbus Children's the data they 
need to follow-up with patients that screened positive for adverse 
health conditions so they can deliver care support services consistent 
with the treatment regimen.
    In addition, The Ohio State University Medical Center (OSU) will 
soon utilize a MediKiosk in the main hospital registration area. 
Scheduled and walk-in patients will be able to check-in and register 
for appointments using the kiosk.
    The kiosk will become an integral part of OSU's efforts to increase 
positive identification of patients and increase accuracy of patient 
records by giving patients control, allowing them to electronically 
update their demographic, guarantor, emergency contact, and insurance 
information. In addition, patients will be able to fill out health 
history information and sign consent forms electronically, helping to 
create a seamless flow of patient information throughout the 
    By using these administrative applications, OSU staff will be able 
to electronically update patient records in their current IDX system. 
As a result, physicians will have immediate access to the patient's 
updated health history information, which increases the quality of care 
the patient receives.
    I commend your enthusiasm for tackling this important issue, and I 
share your belief that we have a significant opportunity to 
dramatically improve the quality of care for patients across the 
country while reducing health care costs. Thank you again for your hard 
work and for taking into consideration the innovative technology being 
used at hospitals in my district as you move forward. If I can be of 
any assistance, please do not hesitate to contact me.
            Very truly yours,
                                                      Deborah Pryce
                                                 Member of Congress


  Statement of Congressman Phil Gingrey, a Representative in Congress 
                       from the State of Georgia

    Chairwoman Johnson, Ranking Member Stark, and Members of the Health 
Subcommittee, on behalf of the citizens of Georgia's Eleventh 
Congressional District, thank you for allowing me the opportunity to 
submit this statement into the record.
    Every day we read in the headlines about the rising cost of health 
care and what it means to every American in this country. More and more 
businesses are no longer able to afford health care benefits for their 
employees, too many Americans are uninsured, health care premiums 
continue to rise each year and the neediest of our nation are not given 
the access to the quality care they deserve.
    There are many ways to tackle the problem of skyrocketing health 
care costs, but I want to focus on healthcare information technology. 
Why does Congress need to be invested in the adoption of health care 
information technology? In September of 2005 RAND released a study that 
showed how a health information technology system that is implemented 
correctly and widely adopted could save the American health care system 
more than $162 billion annually. Since we all know the tremendous 
stress our healthcare system is currently operating under, these 
savings alone are a very compelling justification for congressional 
involvement. However, it was not until I went out into my district, met 
with physicians and representatives from the health IT industry that I 
realized the answer to the question of congressional action.
    The key to the report and my personal research centers around the 
concept of ``widely adopted.'' What role can and should the government 
play in ensuring healthcare information technology is ``widely 
adopted.'' There a variety of thoughts, opinions and pieces of 
legislation centered around this question. The RAND study simply states 
that in order to take full advantage of this potential savings we need 
incentives for physicians to buy quality systems. So the question 
becomes not only what would be the most effective way to incentivize 
physicians, but what is the most fiscally-responsible way to 
incentivize physicians.
    As a physician Member of Congress, I was anxious to go visit 
doctors' offices that were utilizing health information technology to 
see what differences it makes out in the real world. I stopped 
practicing medicine just three short years ago, and I remember vividly 
the overwhelming burden of administrative paperwork. It robbed 
physicians of time with their patients, taking away from them the 
reason they had decided to go to medical school in the first place. 
What I saw put into practice was amazing to me.
    I visited a three doctor OB/GYN practice in Carrollton, GA, which 
purchased their electronic health record system in 2002. I was able to 
watch Dr. Martin as he demonstrated the established routine he follows 
during a patient visit utilizing his computer tablet. He stated that 
their vendor company worked hard to ensure the process flowed to his 
liking and the words and phrases that he used most frequently were 
utilized in the chart template. It was amazing to me how efficient it 
was to document a patient's chart, pull up any necessary tests or 
images; all at the point of care, when it was needed. After my time 
with Dr. Martin in Carrollton, I realized how revolutionary health IT 
was to the healthcare world. It transforms how physicians do business 
on a daily basis by streamlining the process, giving them the tools and 
the information they need when they need it. It even left me thinking 
if my political career doesn't work out, how I would want to jump back 
into medicine with both feet.
    My discussions with these physicians, their office managers and 
representatives from vendor companies, left me astounded by the 
recurring theme of satisfaction. The physicians I spoke with are 
enjoying a higher quality of life, more efficiency in follow up with 
their patients and the flexibility to complete charts and take ``call'' 
from the comfort of their home. The office managers spoke emphatically 
about the almost immediate increased revenue from automating their 
coding and billing process. Not only did they receive payment from 
insurance companies quicker; and they received more accurate payments.
    An increase in revenue to a physician's bottom line is another of 
the big wins in purchasing an electronic health record system. The 
system not only automatically codes the patients' visits but correctly 
codes the visits to ensure the physician is reimbursed accurately for 
the services rendered. In medical school, physicians learn quickly that 
it is easier to ``down'' code a visit than submit a claim that is 
rejected by an insurance company which requires your office to resubmit 
the claim; wasting staff time and taking money away from the practice.
    There are perceptions in the health care system and the federal 
government that there are numerous hurdles preventing physicians from 
incorporating health IT into their offices. These concerns range from 
the time and energy required of physicians to learn a new system, a 
potentially unsustainable decrease in productivity and the natural 
apprehension that comes with any large financial investment. However, 
the reality is that an office will see anywhere from $20,000 to $80,000 
in ROI per physician each year after implementing an integrated health 
IT system.
    I want to present a specific example of what one practice saw as a 
return on investment in their first year after purchasing a complete 
health IT system. I would like to submit for the record an example 
administered by Microsoft Windows Server System. They performed a 
customer solution case study on a five doctor, OB/GYN practice in New 
York that sees about 200 patients a day. For this practice, 
implementing an integrated electronic health record system has cut down 
on the administrative work required of each doctor by one hour every 
day, it has allowed them to see an additional 25 patients each week and 
has given them a first year return on investment of $407,000.
    It is for this particular reason that I believe the best thing 
Congress can do is to create incentives for physicians to incorporate 
health information technology into their practices and then get out of 
the way. This is why I introduced H.R. 4641, the ADOPT Health IT Act, 
which creates just such incentives by increasing the deductions offered 
under section 179 of the tax code for health care providers that 
purchase an EHR system. I have heard from physicians and industry alike 
that section 179 is the strongest motivation for practices to move into 
the world of health IT; but it does not extend far enough to be as 
useful as possible.
    Under current tax code, small businesses can deduct around $100,000 
of the cost of qualified business expenses that are placed into service 
that tax year. My legislation increases this maximum deduction to 
$250,000; therefore, creating a more realistic incentive to spur 
adoption amongst physician practices of all sizes. The average doctor's 
office in this country has 4 physicians in its practice. The average 
cost of a fully integrated and comprehensive health IT system for this 
type of practice is around $165,000-$175,000.
    Currently small businesses have a maximum threshold of $400,000 for 
qualified equipment purchases in any given year. My legislation would 
increase that to $600,000, to ensure that practices aren't deciding 
between upgrading their out of date x-ray machine and investing in 
health IT.
    The logic behind this idea is that physicians, like all small 
business owners, look at what the tax code can offer them as they 
consider purchasing equipment for their business.
    H.R. 4641 allows Section 179 of the tax code to better represent 
the actual cost of an EHR system. By appealing to a physician's 
business instinct and allowing the tax code to provide incentives, we 
can create a much more effective way of getting health care information 
technology into every physician's office around the country. These 
incentives will work far better than simply dumping federal grants into 
the health care system.
    In closing, I again want to express my gratitude for this 
opportunity and respectfully ask for your consideration of the 
initiative I laid out today.