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




 
           USING INFORMATION TECHNOLOGY: FOR THE HEALTH OF IT

=======================================================================

                                HEARING

                               before the

                 SUBCOMMITTEE ON THE FEDERAL WORKFORCE
                        AND AGENCY ORGANIZATION

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 1, 2006

                               __________

                           Serial No. 109-245

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
BRIAN P. BILBRAY, California

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                      Benjamin Chance, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

     Subcommittee on the Federal Workforce and Agency Organization

                    JON C. PORTER, Nevada, Chairman
JOHN L. MICA, Florida                DANNY K. DAVIS, Illinois
TOM DAVIS, Virginia                  MAJOR R. OWENS, New York
DARRELL E. ISSA, California          ELEANOR HOLMES NORTON, District of 
KENNY MARCHANT, Texas                    Columbia
PATRICK T. McHENRY, North Carolina   ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   CHRIS VAN HOLLEN, Maryland

                               Ex Officio
                      HENRY A. WAXMAN, California

                     Ron Martinson, Staff Director
                  Chad Bungard, Deputy Staff Director
               Chad Christofferson, Legislative Assistant
           Adam C. Bordes, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 1, 2006................................     1
Statement of:
    Crane, James P., M.D., associate vice chancellor for clinical 
      affairs, CEO Washington Univ. Physicians Faculty Group 
      Practice, Washington University School of Medicine.........    58
    Green, Daniel A., Deputy Associate Director, Center for 
      Employee and Family Support Policy, Office of Personnel 
      Management.................................................    10
    Paz, George, chairman, president and chief executive officer, 
      Express Scripts, Inc.......................................    46
    Powner, David, Director, IT Management Issues, U.S. 
      Government Accountability Office...........................    21
    Rothstein, Mark A., Institute for Bioethics, Health Policy, 
      and Law University of Louisville School of Medicine........    67
Letters, statements, etc., submitted for the record by:
    Crane, James P., M.D., associate vice chancellor for clinical 
      affairs, CEO Washington Univ. Physicians Faculty Group 
      Practice, Washington University School of Medicine, 
      prepared statement of......................................    62
    Green, Daniel A., Deputy Associate Director, Center for 
      Employee and Family Support Policy, Office of Personnel 
      Management, prepared statement of..........................    13
    Paz, George, chairman, president and chief executive officer, 
      Express Scripts, Inc., prepared statement of...............    51
    Porter, Hon. Jon C., a Representative in Congress from the 
      State of Nevada, prepared statement of.....................     3
    Powner, David, Director, IT Management Issues, U.S. 
      Government Accountability Office, prepared statement of....    23
    Rothstein, Mark A., Institute for Bioethics, Health Policy, 
      and Law University of Louisville School of Medicine, 
      prepared statement of......................................    69


           USING INFORMATION TECHNOLOGY: FOR THE HEALTH OF IT

                              ----------                              


                       FRIDAY, SEPTEMBER 1, 2006

                  House of Representatives,
      Subcommittee on Federal Workforce and Agency 
                                      Organization,
                            Committee on Government Reform,
                                                     St. Louis, MO.
    The subcommittee met, pursuant to notice, at 1 p.m., in the 
Main Auditorium, Eric P. Newman Education Center, Washington 
University Medical Center, St. Louis, MO, Hon. Jon C. Porter 
(chairman of the subcommittee) presiding.
    Present: Representatives Porter and Clay.
    Staff present: Ronald Martinson, staff director; B. Chad 
Bungard, deputy staff director, chief counsel; Chad 
Christofferson, legislative assistant; and Adam C. Bordes, 
minority professional staff member.
    Mr. Porter. Good afternoon. I would like to bring the 
meeting to order. I appreciate you all being here today. Can 
you hear me OK? I guess that's a yes. Thank you very much.
    Today I'd first like to acknowledge our committee and staff 
that are with us. As subcommittee chairman, it's an honor for 
me to have some great folks that work for me that helped put 
today's meeting together. We are the Subcommittee on the 
Federal Workforce and Agency Organization, where we have 
jurisdiction over all Federal employees, and jurisdiction over 
all Federal agencies. Plus we have oversight on many, many 
other issues that are impacting our communities across the 
country.
    I am a Member of Congress from the State of Las Vegas. I 
used to tell folks that I represent Nevada and people would 
say, Well, that's nice. And one time I was at a--actually I was 
at Bethesda Naval Hospital and one of the folks that had been 
serving in Iraq had been in the hospital and I introduced 
myself as coming from Nevada, and he looked up to me and said, 
Have you ever been to Las Vegas? And I smiled, and he smiled, 
and I said, Yeah, I represent Las Vegas. The young man next to 
him in the hospital bed said, Yeah, I want to go to Las Vegas 
when I get out of the hospital. So I find that if I say I'm 
from Las Vegas, I seem to get a twinkle, and many times a 
story. Just know that what happens in Las Vegas stays in Las 
Vegas.
    But I am honored to be here today with my committee and 
staff--I was asked to be here by Lacy Clay, also a very good 
friend of mine, and a good friend I know to St. Louis and the 
State and the country. I want you all to know that it is Lacy 
that has brought the subcommittee here on a very important 
topic that I know is going to impact every man, woman and child 
in the country, and it has to do with technology and 
information and healthcare and what we can do to help improve 
healthcare.
    Lacy and I worked on numerous pieces of legislation to try 
to help our families with the healthcare and have some 
ownership of healthcare. And today we had a chance to have 
lunch and have a meeting next door to the hospital at the 
Barnes-Jewish Center. And I tell you, again, great folks. We 
met with Michael Behaven, Senior Vice President, General 
Counsel; Lee Fetter, President of the Children's Hospital; 
David Weiss, Dr. Andy Ziskin, LeeAnn Chilton. I don't think I 
have missed anyone, but to our friends at BJC, thank you very 
much for your hospitality and sharing with us some of the 
state-of-the-art equipment, technology and means of taking care 
of your patients. So to those folks at BJC, thank you.
    Truly, we have had numerous hearings on this around the 
country, and BJC has some of the finest. So it is a credit to 
you, Lacy, and your community.
    Before I give my formal opening comments, I would like to 
turn it over to Lacy Clay for his opening statement.
    [The prepared statement of Hon. Jon C. Porter follows:]

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    Mr. Clay. Thank you, Mr. Chairman. Let me begin by 
welcoming you and our committee staff to St. Louis, my 
hometown. It's been a real pleasure working with you on health 
IT issues, and I look forward to continuing that.
    We are especially lucky today to be hosted by our friends 
at Washington University Medical Center, whose leadership is 
firmly committed to utilizing and pioneering the latest in 
medical treatments and technological advances on a daily basis.
    I look forward to hearing the testimony of our 
distinguished panels. The benefits of utilizing health IT in 
our healthcare system will result in shorter hospital stays, 
improved management of chronic disease, and a reduction in the 
number of needless tests and examinations administered by 
physicians.
    Although it is not a silver bullet for our Nation's 
healthcare deficiencies, health IT is a tool that will allow us 
to reduce medical errors, improve the quality of care provided, 
and strengthen our health-related research capacities in the 
future.
    According to 2004 data, our national healthcare 
expenditures make up approximately $1.9 trillion of our gross 
domestic product. That represents 16 percent of our entire 
economy. Nevertheless, the institute of medicine estimates that 
medication errors alone result in approximately 1.5 million 
unnecessary injuries annually. These errors often lead to 
significant injuries, or in some cases death. Thus, it seems 
only appropriate to embrace health IT as a tool, not only to 
improve our healthcare outcomes, but to also receive a better 
return on our critical healthcare dollars.
    Therefore, I believe it is time for the Federal Government 
to lead in the development and adaptation of a nationwide 
health information network for electronic records that is more 
efficient than current paper-based record systems, which will 
pave the way for improved-quality measures to track patient 
outcomes.
    We are not alone as advocates for health IT. In fact, 
Health and Human Services Secretary Leavitt recently stated 
that the implementation of electronic health records is the 
most important thing happening in healthcare today.
    According to the Center for Studying Health System Change, 
the use of HIT for clinical activities such as electronic 
health records has nearly doubled since 2001 to about 20 
percent of all providers nationally. Local examples, whom I am 
very pleased to represent, include physicians here at 
Washington University Medical Center, and also providers within 
Missouri's Medicaid program. These programs are now able to 
measure patient outcomes and the effectiveness of treatment 
regimens in order to improve future care.
    Furthermore, electronically stored information can serve as 
a basis for broad-based medical research as patient identities 
are removed and records are studied to determine the outcome of 
past therapies and treatments. As we pursue treatments and 
cures for genetically based disorders, such as some cancers and 
Parkinson's disease, having identifiable clinical information 
readily available to the research community will be invaluable.
    I readily agree with my friends who believe that stronger 
security and privacy protection for a person's medical 
information are desperately needed, and these protections 
should be integral to the establishment of a nationwide health 
IT network.
    However, I do not agree with critics who state that health 
IT platforms used for the preservation or transmission of 
identifiable patient information are any more vulnerable to 
security breaches than and current paper-based record systems.
    In fact, many (inaudible) in accordance with HIPAA have 
already transitioned from paper-based records to electronic 
health records for exchanging patient financial and clinical 
information. What we need now is Federal leadership to define 
the roles and responsibilities of a nationwide health IT 
infrastructure. Appropriate standards should include: 
Requirements for protecting patient information, system 
interoperability standards, vendor software and hardware 
requirements and auditing processes to ensure institutional and 
vendor compliance with all laws and regulations.
    In addition, we must explicitly give patients control over 
their health information for third-party disclosure or research 
purposes. As long as patients can be assured that they have 
ultimate control over the sharing of their personal 
information, then I believe that most will embrace the benefits 
and efficiencies of E-Health solutions in the future.
    It is in this vein that Chairman Porter and I have authored 
and cosponsored innovative legislation to bring the benefits of 
E-health to everyone.
    Chairman Porter's bill, H.R. 4859, the Federal Family and 
Health Information Technology Act of 2006, and that's a 
mouthful, would establish a program for Federal health benefit 
carriers to provide electronic health records among all Federal 
employees.
    I've also introduced H.R. 4832, the Electronic Health and 
Information Technology Act of 2006, along with Chairman Porter, 
and in summary, my bill would strengthen the role of HHS, as 
our Nation's HIT standard (inaudible) authority provide 
(inaudible) to healthcare providers who want to transition to 
E-Health systems, and strengthen our patient privacy laws by 
establishing a uniform standard for all citizens.
    Once again, thank you, Chairman, for your indulgence, and I 
welcome our panelists and guests. Thank you very much for being 
here.
    Mr. Porter. Also let the record reflect that this is a 
bipartisan panel. Contrary to what you read many times, from 
our friends around the country in media, and we have some good 
friends, this is a very important part of what we do, to work 
together. As a Republican from the State of Nevada, and I know 
Mr. Clay is a Democrat, we see what happens across the country 
and we see what happens in Washington, but this is an example 
of an issue that has no partisan boundaries. This is an issue 
that is about our families and our communities, and we agree 
that this should not be a partisan issue, which is why we are 
here together today, and I am honored to be here with my 
friend, Congressman Clay. And to his staff, I appreciate their 
hospitality. It has been a pleasure working with everyone in 
your office. And, of course, to Washington University, to the 
campus, what a great place to be. It's a phenomenal facility, 
and your reputation is absolutely one of the best, and I think 
very germane and I think the point is well-taken, that we are 
talking about a key issue in the halls of Washington University 
where the university is on the cutting edge of healthcare and 
education.
    But also, I gotta tell you, I get nervous when I come to 
the university. I didn't do real well myself. Maybe there is 
still hope because I probably would have been sitting in the 
room sleeping in the back, 30 years ago.
    But again, it is outstanding, so thank you.
    Now, I have to give these formal remarks so bear with me 
for a moment. It's part of being chairman.
    The issue before us today is one that has been gathering 
momentum and is of exceptional importance to every single 
American. It is an issue to which every single American can 
relate. Nearly every one of us will need some sort of 
healthcare in his or her life.
    As a world leader in healthcare science, the United States 
is still deficient in healthcare information management and 
exchange. Today we still have people dying because nonexistent 
or incorrect information is being presented to the caring 
physician who then passes that information, or a lack thereof, 
onto the patient in the form of wrong treatment. People are 
being injured and even killed by incorrect prescription drugs 
or drug dosages. Healthcare costs are increasing at an alarming 
rate due to the malpractice insurance costs and rising patient 
premiums. With the implementation of health IT, we can 
significantly reduce the number of medical errors in patient 
costs. This has been studied and proven in many demonstration 
projects across this country, and even the globe. We are here 
today to discuss what we can do and what is being done to help 
further the progress of America as we move out of the paper-
based healthcare system into an electronic one. I don't think I 
can reiterate enough a statement made by former Speaker of the 
House, Newt Gingrich, ``Paper kills. Instead of saving lives, 
our current paper-based health system is taking over.''
    Over the past year and a half as chairman of the 
subcommittee, I met with numerous groups and individuals 
regarding the use of health IT, and the more I learned, the 
more I realized how important it is for us to get health IT in 
place. It is very unfortunate that senseless deaths are 
occurring every day simply because a pharmacist could not read 
a doctor's handwriting, or because a patient was admitted to 
the hospital unconscious and the doctors treated him for a 
stroke when he was having an insulin shock reaction. It is 
unfortunate, people, like my mother, who is 85, need to fill an 
entire cabinet full of information and paperwork that she must 
haul to doctors regarding her own treatment, and I think it is 
time that we moved forward.
    I realize change is difficult, and with technology 
continuing to grow, improving and changing at an incredible 
rate, it can be difficult to change ourselves. Culturally 
speaking, technology can be somewhat of a shock to our systems. 
But if you look around, none of us are still using telegraph 
machines to transmit messages. We have cell phones, 
Blackberrys, e-mail and much more. It is observed--absurd for 
the healthcare information exchange to remain frozen in time 
while everything else continues to move fast-forward. Think if 
the rest of healthcare had done the same. Would we have modern 
medicines that kill harmful bacteria? Would we have cancer 
treatments? Would we even have something as simple and as 
commonplace today as the x-ray machine? If all these were 
created to improve the quality and delivery of healthcare, why 
are we now stumbling and waiting while innocent people are 
harmed or killed by paperwork? I for one do not want to stand 
by while senseless deaths occur each year. That's why I have 
introduced legislation, along with my colleague, Mr. Clay, that 
would provide health information technology to every Federal 
employee, and there are close to 9 million, with their families 
in the Federal healthcare system.
    It is my hope that this will eventually provide a way for 
health IT to reach everyone across the country, not just 
Federal employees.
    The President stated that he wanted the Federal Government 
to become a leader in the health information technology 
movement. I believe that my legislation helps us do that. This 
legislation would require insurance carriers that provide 
health insurance to Federal employees to create carrier-based 
electronic health records, and eventually personal electronic 
health records. I believe the information about your health 
should be shared with you and should be shared in the format 
that you understand.
    Unfortunately, today, in healthcare, the patient really is 
the last one to see his own information. Everyone else has it 
but him or her.
    Mr. Clay introduced legislation, of which I am an original 
cosponsor, that makes it easier for doctors to begin using 
health IT, by offering grant and loan programs as well as 
creating exceptions to certain (inaudible) and anti-kickback 
laws, but also codify the office of the national coordinator 
for health information technology along with this office to 
receive proper Federal funding. Together, we are trying to make 
a difference in modern healthcare.
    On August 22nd, the president signed an executive order 
that I believe will move the Federal Government's plans toward 
better healthcare. It is something that will be a complement to 
H.R. 4859 very nicely. The executive order will require 
insurance carriers that do business with the Federal Government 
to provide price transparency to their consumers. It also will 
require these carriers to adopt certain quality standards which 
will be monitored and published by the Office of Personnel 
Management. The executive order will require the carriers to 
adopt HIT interoperability standards. To be recognized by the 
Federal Government, it will also require plans to develop more 
consumer-driven health options.
    Our government witnesses today will hopefully touch upon 
this new executive order and what they feel its outcome will 
be. They will also tell how the Federal Government's progress 
is, in the realms of HIT, along with what we need to do to 
improve, we can expect in the coming months and years as health 
information technology continues to prosper. It is my hope that 
the private and education witnesses will tell us how the 
private sector is working to make health IT a national reality, 
whether or not health IT issues are being taught at very basic 
levels of medicine and where it is today in our education and 
training field. In order for us to change the paper mindset, 
new doctors and nurses are going to have to be trained and 
educated before they enter the medical field. Otherwise, it 
will be a continual uphill battle for full HIT implementation.
    I welcome our witnesses today, and welcome those in the 
audience, many of whom I understand are students and faculty, 
and I hope today's hearing will be interesting and educational.
    I would like to note that we will be concluding the hearing 
at approximately 2:30, that we will be calling on each of our 
visitors today to keep their comments to approximately 5 
minutes.
    But first, we need to do a few procedural matters. I'll ask 
unanimous consent that all members have 5 legislative days to 
submit written statements, and questions for the hearing 
record, the answers to written questions to be provided by the 
witnesses also be included in the record. Without objection, so 
ordered.
    Also ask unanimous consent that all exhibits, documents and 
other materials referred to by members and the witnesses may be 
included in the hearing record, that all members be permitted 
to revise and extend their remarks. Without objection, so 
ordered.
    It is also the practice of this committee to administer the 
oath to all witnesses, so if you would now please stand and 
raise your right hands.
    [Witnesses sworn.]
    Mr. Porter. Let the record reflect that the witnesses have 
answered in the affirmative. Please be seated.
    As I mentioned, each witness will have approximately 5 
minutes, and any further statements can and will be entered 
into the record. Of course, the full committee is not here 
today. As I mentioned, the full committee will have the ability 
to enter information in the record also.
    First I would like to introduce the members of the panel. 
We will be hearing from Mr. Daniel Green, the Associate 
Director of Employee and Family Support Policy at the U.S. 
Office of Personnel Management, we will then hear from Mr. 
David Powner, the Director of IT Management Issues with the 
U.S. Government Accountability Office.
    We will then be hearing from Mr. George Paz, the president 
and CEO of Express Scripts, Inc., Dr. James P. Crane, the 
associate vice chancellor for clinical affairs, School of 
Medicine at Washington University, and Mr. Mark A. Rothstein, 
director of institute for bioethics health policy and law at 
the University of Louisville, School of Medicine. Welcome. We 
appreciate you being here. Mr. Green.

STATEMENT OF DANIEL A. GREEN, DEPUTY ASSOCIATE DIRECTOR, CENTER 
  FOR EMPLOYEE AND FAMILY SUPPORT POLICY, OFFICE OF PERSONNEL 
                           MANAGEMENT

    Mr. Green. Mr. Chairman and members of the subcommittee, 
Representative Clay: Thank you for inviting OPM here today to 
discuss the benefits of using health information technology to 
improve the quality and delivery of healthcare. The Office of 
Personnel Management administers the Federal Employees Health 
Benefits Program which covers more than 8 million Federal 
employees, retirees and their dependents. OPM offers 
competitive health benefits products for Federal workers, like 
other large-employer purchasers, by contracting with private 
sector health plans. OPM has encouraged participating health 
plans to be responsive to consumer interests by emphasizing 
flexibility and consumer choice as key features of the program. 
Adoption of health information technology is an important 
healthcare improvement that is being implemented by many of our 
health plans on behalf of their customers.
    In our efforts to ensure healthcare rates are competitive 
and consumer choice is maximized, we are encouraging the use of 
health information technology for medical recordkeeping 
purposes and for many provider-to-consumer processes.
    As the administrator of the countrys largest employee 
health insurance program, OPM plays a key role in fulfilling 
President Bush's vision of making medical records easily 
accessible to consumers through the adoption of advanced 
technologies.
    Ten days ago, the President signed the Executive order, 
Promoting Quality and Efficient Health Care in Federal 
Government Administered or Sponsored Health Care Programs. The 
order firmly underscores the President's continued commitment 
to the promotion of quality and efficient delivery of health 
care. With the order, the President is greatly expanding the 
information that will be made available and he is committing 
the Federal Government to transparency in pricing and quality, 
adopting health IT standards, and providing insurance options 
that reward cost-conscious consumers.
    OPM is strongly committed to working with FEHB carriers on 
carrying out the Presidents goals and objectives. In fact, we 
have already begun taking steps in this direction.
    To ensure the electronic availability of quality and price 
information, OPM is working with carriers to encourage them to 
make their health IT systems interoperable. OPM is also 
continuing to work with carriers to ensure that FEHB enrollees 
have access to innovative health insurance options that allow 
consumers to select health plans with lower premiums as well as 
allow them to share in the savings that may result from 
efficiencies gained with the implementation of health 
information technology.
    Our work with FEHB carriers and the work we are engaged in 
with HHS and others have helped us focus our near-term efforts 
to further the Presidents initiatives. Some carriers are 
offering personal health records to enrollees based on the 
claims, medications and medical history information already 
available in their healthcare systems. Some are also working 
with their pharmacy benefit managers to encourage ePrescribing, 
to link their disease management programs to health IT, and to 
ensure compliance with Federal requirements that protect the 
privacy of individually identifiable health information.
    We plan to expand our Web site information to highlight the 
health IT capabilities of plans so that prospective enrollees 
can view this information in reviewing their health plan 
choices for 2007.
    We are committed to confronting the rising cost of 
healthcare to help members of the Federal family afford the 
insurance coverage they need. This is reflected in our 
commitment to the Presidents Executive order and in our goals 
to strengthen the patient-physician relationship through price 
and quality transparency. We believe greater transparency in 
healthcare prices and quality can help patients better control 
their medical expenses. Therefore, we have taken steps in the 
FEHB Program to raise the level of transparency that is 
available to enrollees for both provider prices and health-plan 
quality by the end of this year. We will highlight the plans 
that have demonstrated their commitment to OPMs healthcare cost 
transparency standards in our annual Guide to FEHB Plans and on 
our Web site.
    Our commitment to transparency aligns with our efforts to 
promote wider use of health information technology. Each 
initiative supports the other, as articulated in the Executive 
order. Information technology will provide for standardized 
interoperable medical, pharmaceutical, and laboratory cost and 
utilization information. Making this information more 
transparent to consumers will help them to understand the value 
of personal health records in managing their own health needs 
and their healthcare expenses.
    Together, we believe health IT and transparency can drive 
better-informed and more rational medical care decisions, 
resulting in increased efficiency and better quality care.
    We appreciate this opportunity to testify before the 
subcommittee and look forward to working with you on furthering 
health information technology initiatives. I will be glad to 
answer any questions you may have.
    [The prepared statement of Mr. Green follows:]

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    Mr. Porter. Thank you, Mr. Green. Mr. Powner, we welcome 
you again, and you are the Director of IT Management Issues at 
the GAO.

STATEMENT OF DAVID POWNER, DIRECTOR, IT MANAGEMENT ISSUES, U.S. 
                GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Powner. Chairman Porter, Representative Clay, we 
appreciate the opportunity to testify on healthcare information 
technology. As we have highlighted in several recent reports 
and testimonies for you, Mr. Chairman, as well as for Chairman 
Davis at the full committee, significant opportunities exist to 
use technology to improve the delivery of care, reduce 
administrative costs and to improve our Nation's ability to 
respond to public health emergencies.
    Mr. Chairman and Representative Clay, I would like to 
commend both of you for introducing key legislation intended to 
further the adoption of health IT. Leveraging the Federal 
Government as a purchaser and provider of healthcare is 
critical. Mr. Chairman, your legislation calling for OPM to 
advance the creation of health records does just that. The 
Federal Employee Health Benefits Program has over 8 million 
beneficiaries, and advancing electronic health records to this 
critical mass would be significant.
    Representative Clay, I first would like to thank you for 
your many years of overseeing key technology issues as the 
ranking member of the technology subcommittee. Your oversight 
of the Federal Government's annual $60 billion investment in IT 
has been essential and appropriately focused on improving the 
government's information security posture. Your health IT 
legislation highlighting the need for standards, privacy and 
security practices and a strategic plan are essential building 
blocks to accomplish the president's goal of a nationwide 
implementation of interoperable health IT.
    This afternoon I will briefly describe the importance of 
information technology to the healthcare industry, progress to 
date and additional actions needed to put in place a detailed 
game plan for meeting the president's goals. Information 
technology can lead to many benefits in the healthcare industry 
that we have reported on for the past several years. For 
example, using bar code technologies and wireless scanners to 
verify the identities of patients and their correct medications 
can and has reduced medical errors.
    In addition, surveillance systems can facilitate the timely 
collection and analysis of the disease-related information to 
better respond to public health emergencies. Standards-driven 
electronic health records have the potential to provide 
complete and consistent medical information necessary for 
optimal care. Electronic health records are critical since they 
are the central component of an integrated health information 
system, have the potential to reduce duplicative tests and 
treatments and can lead to reduction in medical errors.
    Several major Federal healthcare programs including 
Medicare, Medicaid and OPM's Federal Employee Health Benefits 
Program provide healthcare services to over 100 million 
Americans. Given the Federal Government's influence over this 
industry, Federal leadership can lead to significant change 
associated with the adoption of IT. Given this in April 2004, 
President Bush called for the widespread adoption of 
interoperable healthcare records within 10 years, and 
established a position of the national coordinator for health 
IT.
    The national coordinator's office has issued a framework to 
guide the Nation's efforts, establish working groups of 
industry experts, and awarded contracts to define future 
direction. Through these efforts my written statement describes 
progress that has been made in five key areas.
    First, certification criteria for ambulatory or electronic 
health records has been defined and 22 health record vendors 
have achieved certification.
    Second, interoperability standards have been identified.
    Third, prototypes for a national health information network 
are currently being pursued.
    Fourth, privacy and security issues are being studied 
through contractual means in a newly formed American Health 
Information Community Work Group.
    Fifth, the integration of public health data into these 
many efforts continues to be a focus area.
    HHS through its contracts in the American health 
information community has made tangible progress to date, but 
significant challenges and efforts remain, including, further 
refinement of an accepted interoperability standards and 
insured widespread and consistent implementation, agreeing to 
an approach and deploying a secure national health information 
network, addressing privacy concerns so that these do not 
impede technological progress, fully leveraging the government 
as a purchaser and provider of healthcare and providing 
incentives for the private sector to partner and participate.
    As we have previously recommended, these challenges and 
remaining efforts could benefit from a national strategy that 
includes detailed plans, milestones and mechanisms to monitor 
progress. Until these plans and milestones and performance 
measures are completed, it remains unclear specifically how the 
President's goal will be met and what the interim expectations 
are for achieving widespread adoption of interoperable 
electronic health records.
    Mr. Chairman and Representative Clay, thank you for your 
leadership in pushing IT to this critical industry.
    [The prepared statement of Mr. Powner follows:]

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    Mr. Porter. Thank you very much for your testimony. We will 
go off the script for a moment and summarize what we've heard 
so far. We feel a responsibility as a Federal Government to set 
the standard. There are a lot of different programs, different 
approaches to health IT and we are happy that's happening. But 
as Mr. Clay and I looked at the issues specific to Federal 
employees, we felt that if we can set the standard with 8 
million or more participants, that will incur the balance of 
the private sector across this country to step up to the plate. 
That's the insurance carriers, providers, all gamuts of the 
healthcare delivery system.
    So not only are we talking about Federal employees, we 
realize that if we can set the standards, we will save lives 
across the country. So we appreciate the government's 
perspective, the experts that we have here today.
    Next we would like to hear from the private sector and from 
the university system and get their perspective on what's 
happening.
    I know that we have with us Mr. Paz who is the president 
and CEO of Express Scripts, Inc. I understand that you are one 
of the largest providers in the country and a major employer 
here in the St. Louis area and in the State. Mr. Clay and 
others in the community have spoken highly of what you are 
doing for the community and for healthcare, so we appreciate 
you being here. Mr. Paz, if you would give us your testimony, 
please.

    STATEMENT OF GEORGE PAZ, CHAIRMAN, PRESIDENT AND CHIEF 
            EXECUTIVE OFFICER, EXPRESS SCRIPTS, INC.

    Mr. Paz. Good afternoon, Chairman Porter and Congressman 
Clay. My name is George Paz, and I am chairman, president and 
CEO of Express Scripts, Inc., a Fortune 150 company based here 
in St. Louis.
    Express Scripts provides pharmacy benefit management 
services to tens of millions of Americans throughout its 
relationships with employers, managed care plans, unions and 
governmental entities. We employ over 13,000 people across the 
country and in Canada. Last year we processed more than 475 
million prescription claims, and in the last quarter we 
reported an industry-leading generic fill rate of 56.3 percent.
    I am here today to talk about our experiences in electronic 
healthcare, and to offer our recommendations for you to 
consider in your efforts to spur further adoption and 
utilization of these exciting technologies. I have prepared 
additional materials which I would like to submit for the 
record.
    Before I begin, let me first congratulate the Congress on 
your efforts to date. Congressional efforts toward the 
encouragement of electronic healthcare solutions have created 
great momentum in both the public and private sectors. 
Provisions in the Medicare Modernization Act relating to 
electronic prescribing standards have led to positive dialog 
toward standards in both government and the private sector. 
Inclusion of the directive in the MMA relating to the creation 
of exceptions to the Stark law and safe harbors under the 
Medicare fraud and abuse laws, have led to positive 
developments on both fronts which may help to spur adoption.
    Also before I begin, let me just clarify that when we talk 
about electronic prescribing, it is important to note that what 
we mean is a process by which a prescribing physician, at the 
point of prescribing, has access to current eligibility, 
formulary, medication history and other relevant information, 
in order to inform the prescribing decision and facilitate a 
discussion with the patient about the costs and benefits of 
differing treatment options. We are not simply referring to an 
electronic process to move a prescription from point A to point 
B.
    From the early days of the Internet boom, Express Scripts 
has been working with technology vendors in their pursuit of 
solutions that would allow physicians to prescribe medications 
more safely, more efficiently, and more affordably for their 
patients. Early on, we formed relationships with many of these 
companies to provide formulary information for our members so 
that it could be made available to physicians at the point of 
prescribing. However, as the industry grew, we came to realize 
that working with each of these companies individually did not 
maximize efficiency, nor did it allow the industry to maximize 
the potential of these new technologies. At about the same 
time, our chief competitors were coming to the same 
conclusions.
    In February 2001, we formed RxHub with Medco Health 
Solutions and a company that is now Caremark. The purpose of 
RxHub was three-fold. First, we wanted to create a common 
infrastructure to connect many payors and prescription benefit 
managers to many electronic prescribing vendors. Second, we 
wanted to create transaction standards so that we could conduct 
electronic prescribing transactions in a standard format across 
all connected participants. Finally, we sought to create a 
critical mass of information so that physicians who adopted 
electronic prescribing technologies could get access to 
relevant prescribing information for a sizable portion of their 
patients.
    I am proud to say that our vision for RxHub has been 
achieved. In fact, RxHub now connects six data sources to over 
30 technology vendors, and the numbers continue to grow. RxHub 
led a comprehensive industry-based consensus process that led 
to the creation of transaction standards for electronic 
prescribing, and those standards have become the de facto 
industry standard. A number of them are currently being pilot-
tested in conjunction with the CMS pilots for recognition of e-
Prescribing standards for the Medicare program. By adopting 
electronic prescribing solutions connected to RxHub, physicians 
today can access information to create safer, more affordable 
prescriptions for over 150 million Americans.
    Nonetheless, our overall vision for electronic prescribing 
has yet to be fully realized. The industry remains hampered by 
a patchwork of State laws and regulations that create 
conflicting demands on prescribers and electronic prescribing 
vendors. The standards for electronic prescribing envisioned 
under the Medicare Modernization Act thus far only apply to 
Medicare, and don't address all of the issues germane to 
electronic prescribing. Whereas, we believe, the MMA envisioned 
a comprehensive national set of standards for electronic 
prescribing that would promote broad adoption. The legislative 
language has been interpreted as essentially creating a 51st 
standard of requirements for Medicare patients as an overlay to 
the 50 existing State regulatory schemes applicable to 
electronic prescribing. Because these State laws are not 
preempted, the Medicare scheme cannot drive the market as is 
sometimes the case. This needs to be fixed.
    Another remaining issue, perhaps related, is that 
electronic prescribing cannot reach its full potential until 
all physicians adopt it. Getting physicians to adopt the 
technology has remained more challenging than we had hoped, and 
the reasons for that are varied. I'll offer here just a few.
    First, and perhaps foremost, physicians have generally not 
been given incentives to transform their paper-prescribing to 
electronic. Adoption has been most successful where payors and/
or employers have joined together to help physicians purchase 
the technology, or offered financial incentives tied to 
adoption and the use of it. In most markets, however, no one 
employer or payor has a significantly large portion of the 
market to justify paying for technology initiatives that will 
serve to benefit all patients.
    Moreover, in order to make a meaningful impact on overall 
utilization, adoption initiatives often would need to reach 
thousands of physicians. While stand alone electronic 
prescribing solutions are relatively inexpensive, in the 
vicinity of $2,000 per physician for the first year, the cost 
of providing technology to thousands of physicians is often 
daunting.
    Consequently, physicians must make the decision to adopt, 
and fund it on their own. But many physicians believe they 
should not be required to fund the technologies themselves, 
since most of the financial benefit from enhanced prescribing 
accrues to the payors, employers, and patients. These issues 
could be solved, either through a funded mandate, or better-
aligned incentives for physicians. Given the new Medicare drug 
benefit, the Federal Government has as much at stake as anyone.
    Another issue facing physicians is what to adopt. The 
significant and growing interest in Health IT by the Federal 
Government over the past few years has drawn great attention, 
and has spurred the industry to further develop technologies 
and pursue interoperable solutions. At the same time, the sheer 
volume of activity in the industry and in Washington have left 
many wondering what the outcome would be. The push toward 
electronic personal health records, interoperable electronic 
medical records and regional health information organizations, 
combined with Federal initiatives like the pursuit of a 
National Health Information Infrastructure, the American Health 
Information Community, and various legislative proposals, have 
left some physicians afraid to adopt any technology for fear of 
it becoming obsolete in the near future.
    This is unfortunate. Workable solutions exist today, and 
should not wait. Perfection in the form of interoperable health 
records for every American, should not become the enemy of 
good. Good can be achieved today, by improving quality and 
reducing costs in connection with prescription medications, 
through electronic prescribing. What's more, in addition to the 
immediate benefits that are achievable through broad adoption 
of electronic prescribing, it is also a good first step for 
clinicians toward more sophisticated solutions.
    The adoption of electronic prescribing is relatively 
simple. The technology generally is compatible with existing 
office systems used by physicians, installation is relatively 
easy, and the learning curve for using the technology is quick. 
At most, physicians need a little extra time to get used to 
using a stylus and a handheld computer, rather than paper and a 
pen. More importantly, adoption of the technology does not 
disrupt other physician-office systems. Existing records 
remain, but are augmented by electronic prescribing solutions.
    In contrast, for a physician to adopt a full electronic 
medical record system, the entire office needs to be 
transformed. While the transformation is clearly achievable, 
and solutions are becoming increasingly sophisticated, it is 
often daunting for physicians. Entire rooms of paper records 
need to be digitized for future access, or a hybrid system 
would need to be adopted to accommodate the physicians need to 
see the historical record in order to make current treatment 
decisions. In that instance, physicians would need to access 
both a paper and an electronic medical record. Many physicians 
simply cannot face the expense or the disruption of such a 
major paradigm shift. This has major implications for the 
ability of our healthcare system to tackle the problem. Today, 
physicians trained using electronic records often have had to 
learn to use a paper system when they joined an existing 
practice. It is not a simple problem, and a subset of patients 
with electronic personal health records wont be enough to push 
a physician to make the transition.
    Until electronic medical records are widespread in 
physician offices, we believe the push toward electronic 
personal health records may be misplaced. While greater patient 
involvement in their own healthcare is a laudable goal, without 
an interoperable system through which physicians can easily 
interact with such records, they aren't likely to succeed in 
enhancing efficiency and safety in the delivery of care. 
Ultimately, it will only re-create the current system in which 
it is incumbent upon patients to inform their physicians of 
existing medical conditions and prior history. Having a new 
system to achieve that, whether through printouts or Web 
access, may not add much. Patients who utilize them may be 
better equipped to be advocates for their own better care, 
though many may elect not to use them given that their 
physicians wont be able to do much with them.
    In contrast, getting physicians to prescribe electronically 
will create great impact for our entire healthcare system. 
Internal unpublished research at Express Scripts has estimated 
that just a single percentage point increase in generic 
utilization creates approximately a 1 percent savings in 
overall drug spend. Electronic prescribing has been shown in a 
number of published studies to help physicians increase generic 
utilization by multiple percentage points.
    As important, the recent Institute of Medicine report, 
Preventing Medication Errors, estimates that there are at least 
1.5 million preventable adverse drug events per year, creating 
cost in excess of $3.5 billion. That report lists a number of 
potential solutions which may help bring this problem under 
control. Among the offered solutions are the adoption of 
electronic solutions by prescribers, and greater patient 
involvement in their own care. These are achievable goals. Many 
electronic prescribing solutions integrate solutions which 
allow patients to provide inputs as to their own medications, 
including over-the-counter medications, which are then readily 
accessible to physicians using the system. These solutions are 
available today. They are affordable, and they have great 
potential for transforming the cost and quality of care. We 
urge you to look closely at these solutions as you deliberate 
about how programs for Federal employees can spur change in our 
entire healthcare system.
    In closing, let me reiterate our principal recommendations: 
First, we believe it is imperative to clearly establish a 
comprehensive, Federal preemptive set of standards for 
electronic prescribing, leveraging industry experience and the 
workable processes adopted by standards development 
organizations.
    Second, we urge you to help find ways to either assist 
physicians with the cost of adoption of electronic prescribing, 
or implement appropriate incentive arrangements for them to 
adopt on their own, and help push physicians toward adoption of 
electronic prescribing as a logical first step toward capturing 
the advantages of e-health.
    Finally, we recommend that any Federal efforts toward the 
encouragement of other e-health solutions such as personal 
health records or electronic medical records, make explicitly 
clear that all solutions must be developed to be compatible 
with the e-prescribing standards, so that physicians will be 
confident when adopting electronic prescribing that other 
developing technologies will be compatible. Thank you for 
having me here today.
    [The prepared statement of Mr. Paz follows:]

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    Mr. Porter. Thank you, Mr. Paz. I appreciate your 
testimony. Next we have Dr. James Crane, associate vice 
chancellor for clinical affairs, Washington University.

 STATEMENT OF JAMES P. CRANE, M.D., ASSOCIATE VICE CHANCELLOR 
 FOR CLINICAL AFFAIRS, CEO WASHINGTON UNIV. PHYSICIANS FACULTY 
    GROUP PRACTICE, WASHINGTON UNIVERSITY SCHOOL OF MEDICINE

    Dr. Crane. Thank you, Mr. Chairman and Congressman Clay. We 
appreciate you coming to Washington University Medical Center 
today to hold this hearing, as well as the opportunity to 
discuss the benefits and challenges of utilizing health 
information technology to improve both the quality and delivery 
of healthcare.
    My name is James Crane. I am an actively practicing 
physician and also serve as CEO of Washington University's 
faculty group practice. By way of background, our group 
practice is composed of 980 faculty physicians, or roughly one 
in every 10 physicians practicing in the State of Missouri. We 
are the third-largest academic group practice in the Nation and 
we encompass 53 different medical and surgical subspecialties. 
Each year we care for nearly 300,000 patients annually, with 75 
percent of our clinical activity occurring here on the Medical 
Center campus and the remaining 25 percent distributed across 
49 locations in suburban St. Louis and rural Missouri and 
Illinois. We are the largest Medicaid physician provider in the 
State of Missouri and a critical provider of specialty care for 
the uninsured in our community.
    I am here today to share with you our progress in 
implementing an electronic health record for our patients, the 
benefits we hope to achieve and the hurdles we face.
    Many of our patients have chronic and complex medical 
problems and require highly coordinated care involving multiple 
subspecialties. This, along with the geographically distributed 
nature of our clinical practice, were major catalysts in our 
decision to move to develop an electronic health record for our 
patients.
    As you've heard, EHRs offer many advantages for both 
patients and providers. My comments today will focus on four 
specific ways in which the quality and efficiency of patient 
care can be enhanced by health information technology.
    The first specific way is the ability to have a single 
integrated patient chart. Historically, each of our 53 
subspecialties here on the campus have maintained their own 
paper medical records which are stored in different locations. 
As you can imagine, managing paper records for 300,000 patients 
seeking the care of 53 different subspecialties across a 130-
acre campus, not to mention our dozens of off-campus clinics, 
is an enormous and highly complex undertaking. Our EHR 
initiative allows us to integrate these separate paper charts 
into a single integrated health record for each patient. This 
insures that all of the physicians involved in a patient's care 
have full access to the information they need to make informed 
medical decisions and deliver the best possible care.
    The second benefit is the ability to have real-time access 
to a patient's chart after-hours. Patients commonly present at 
nights or on weekends with emergent and sometimes life-
threatening situations. An integrated EHR provides the treating 
physician with instant access to a complete list of the 
patients medical problems, their medications, and other 
information regarding their past medical history that can 
eliminate the need for redundant testing, expedite care and 
prove critical in guiding management and influencing clinical 
outcomes. We have designed our EHR's so the patients medical 
record can be immediately accessed via a HIPAA-compliant secure 
network from virtually any location, including a hospital 
environment, the emergency room, the clinic, a physicians 
academic office, their home or even from out of town.
    A third major benefit from my perspective is the 
opportunity to enhance patient safety. As has been mentioned, 
the Institute of Medicine estimates that 1.5 million Americans 
are injured annually by preventable medication errors. Our EHR 
solution includes an e-prescribing component that guards 
against medication errors via built-in logic that automatically 
checks for proper dosage, drug allergies and potential adverse 
interactions with other medications the patient may be taking.
    Another way to enhance patient safety is via the task 
management functionality built into our EHR solution. As an 
example, the system automatically alerts the ordering 
physicians of any abnormal lab results. This ensures that 
abnormal lab findings are acted upon promptly and not 
inadvertently lost or filed without proper physician review.
    The fourth benefit I'll mention is the ability to advance 
medical discovery and define best clinical practice via 
clinical outcomes research. As a research institution, 
Washington University is focused not only on providing the best 
care possible, but also in finding ways to make care even 
better. Properly designed EHRs create a searchable data base 
that can be used to answer important clinical questions about 
the efficacy and the safety of new therapies and procedures. We 
are designing our EHR system in such a way that anonymous 
patient data can be mined, analyzed and utilized to advance the 
practice of medicine. Electronic retrieval of clinical data 
will become increasingly important in the future as advances in 
genomics allow us to tailor or personalize medical therapies to 
make them more effective and reduce unwanted side effects.
    Let me move on now to two key challenges and lessons 
learned as we have deployed our enterprise-wide EHR at 
Washington University School of Medicine.
    The first point I would like to make is the startup costs 
are substantial. Once fully implemented, EHRs can enhance 
physician and support staff productivity and reduce operating 
expenses associated with paper-record storage, dictation and 
transcription of physician notes and copying and faxing of 
paper records to referring physicians and other consultants 
involved in a patients care. To achieve these improvements, the 
Medical School is investing $10.5 million to implement our EHR 
solution across the faculty practice, an average cost of 
$12,445 per faculty physician. Our experience suggests that 
while these gains will be sufficient to offset the ongoing 
maintenance costs for our EHR system, we will not recover the 
startup and development costs. This is a significant challenge 
for us to fund internally and is the major reason we are 
phasing in our EHR over a 4-year period.
    The pace of EHR adoption on a national basis would be 
greatly accelerated if external public or private-sector 
funding were made available to help providers defray the cost 
of migrating from paper record systems to electronic format. 
This would also be a sound investment for governmental and 
private payors. For example, the Center for Health Information 
Technology has estimated that universal adoption of e-
prescribing across the Nation would save payors $29 billion 
annually thanks to systems that automatically alert physicians 
to formulary coverage and generic drug options. While payors 
would be the primary beneficiary of universal e-prescribing, 
physicians must bear the implementation and ongoing maintenance 
cost for e-prescribing systems.
    One of the merits of H.R. 4832 is the creation of statutory 
safe harbors that would allow hospitals and payors to donate 
health IT software and hardware to physicians, thereby helping 
to mitigate the substantial financial costs associated with EHR 
adoption. As the door is opened for the donation of technology, 
we believe steps should be taken to ensure that such assistance 
is motivated by the goals of improved patient care and quality 
and not for purposes of competitive advantage.
    Direct Federal funding to help providers implement EHRs 
would serve as an even greater catalyst to facilitate the 
widespread physician adoption of health information technology 
and should be given serious consideration.
    The second point I would like to make has to deal with the 
complexity of designing an integrated EHR. A key challenge in 
getting physicians to migrate to electronic health records is 
demonstrating their value. Busy clinicians must feel confident 
that an EHR will enhance their ability to deliver better care 
and to enhance patient safety. Physicians also need assurances 
that any EHR solution will improve, not impede, physician and 
staff productivity. To provide these assurances, we have taken 
great care to design our EHR to meet the unique needs of each 
subspecialty in terms of what information is captured and how 
that information is organized in an electronic format to 
streamline work flow and efficiency.
    We have developed a process for engaging the physician and 
support staff stakeholders within each subspecialty to 
customize the design of our EHR to meet their particular needs. 
This process takes, on average, 6 months to complete the 
design, train the physicians and staff and then ``go live.''
    We have also had to invest significant time and resources 
in building interfaces with other clinical information systems 
to provide our clinicians with the ability to review radiology 
studies online and to review lab results and inpatient hospital 
data within a single integrated electronic record.
    The take-home lesson here is that designing and building a 
robust EHR requires careful thought, meaningful stakeholder 
engagement and most importantly, time. The complexity of EHR 
development and implementation needs to be appreciated by 
Federal leaders as they craft legislation defining timelines 
and standards for electronic health records.
    We recognize that legislation such as H.R. 4832 is intended 
to foster the growth of interoperable health information 
systems. I am encouraged by such efforts, especially those to 
assist healthcare providers in making this paradigm change.
    Thank you, again, for the opportunity to share our 
experience and our perspective as providers and for your 
understanding of these complex and important issues.
    [The prepared statement of Dr. Crane follows:]

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    Mr. Porter. Thank you, Dr. Crane. I appreciate it. Next is 
Mark Rothstein, director, Institute for Bioethics Health 
Policy. Welcome.

STATEMENT OF MARK A. ROTHSTEIN INSTITUTE FOR BIOETHICS, HEALTH 
  POLICY, AND LAW UNIVERSITY OF LOUISVILLE SCHOOL OF MEDICINE

    Mr. Rothstein. Thank you very much. Good afternoon, 
Chairman Porter, Representative Clay. My name is Mark 
Rothstein. I am the Director of the Institute for Bioethics 
Health Policy and Law at the University of Louisville School of 
Medicine. I am also Chair of the Subcommittee on Privacy and 
Confidentiality of the National Committee on Vital and Health 
Statistics, which is the statutory public advisory committee to 
the Secretary of Health and Human Services on health 
information policy. I am testifying today in my individual 
capacity.
    I am pleased to testify about the significant privacy and 
confidentiality issues surrounding the conversion of our health 
records system from paper to electronic form and the linking of 
electronic health record systems through an interoperable 
network to create the Nationwide Health Information Network.
    Many individuals are concerned about the potential for 
sensitive information to be divulged through negligent or 
intentional acts of snoops, hackers, rogue employees, or--as 
we've seen recently--the careless storage of sensitive 
information. Although these concerns are valid and demand 
strong security measures, I want to focus on more fundamental 
questions of privacy and confidentiality. In short, as we move 
from paper to electronic records, its not just the form of the 
records that will change, its the magnitude and nature of the 
contents.
    Today, the No. 1 protection for privacy and confidentiality 
of individual health information is the fragmentation of the 
health records system. It would be practically impossible to 
aggregate all of the paper health records for the typical adult 
who has lived in several places and who has seen numerous 
healthcare providers for a myriad of conditions over many 
years. In an electronic health records system, however, the 
fragmentation will be gone. That's a good thing for a variety 
of individual and public health reasons that you heard 
discussed previously. But, it will mean that with a few key 
strokes, healthcare providers will be able to obtain all of an 
individual's health records. In many cases, the old records 
will have no medical relevance or clinical utility to the 
reason the person is currently being treated. Furthermore, the 
old records may contain extremely sensitive information related 
to domestic violence reports, drug and alcohol treatment, 
reproductive health, sexually transmitted diseases, mental 
health, and all sorts of other things.
    An even more troubling implication is the fact that 
individual health records are frequently used in nonhealthcare 
settings. It is common for employers, life insurers, and other 
third parties to condition a job or an insurance policy on an 
individual signing an authorization for the release of his or 
her health records. Such practices are legal. According to my 
research, there are approximately 25 million compelled 
authorizations in the United States each year. Today, sensitive 
health information is disclosed to numerous entities, many of 
which are not covered under the HIPAA Privacy Rule. In the 
future, the volume and detail of these records will increase 
greatly.
    In designing the NHIN, individuals need to be given a 
meaningful say in how their records are linked and disclosed. 
To date, however, there has been inadequate consideration of 
the specific rights of individuals to, for example, opt in or 
out of the NHIN or to control what records are disclosed and to 
whom. There also has been little effort in researching the 
feasibility of privacy-enhancing technologies that could be 
incorporated into the NHIN. If such measures are not included 
within the NHIN architecture, it may be too late or 
prohibitively expensive to add these features in the future.
    Mr. Chairman and Representative Clay, our health records 
system and our healthcare system in general are based on the 
trust that individuals have in their physicians, nurses, and 
other professionals to safeguard their confidential 
information. If we develop an interoperable, comprehensive 
health records system that undermines patient trust, then the 
political support for the NHIN will be destroyed, and 
substantial numbers of individuals are likely to engage in 
defensive practices to protect their privacy that could 
jeopardize their own health and also the health of the public. 
I thank the members of the subcommittee, and I look forward to 
your questions.
    [The prepared statement of Mr. Rothstein follows:]

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    Mr. Porter. Thank you very much. We appreciate your 
testimony. I will open up the questions from the panel. And due 
to time, we will be submitting additional questions for you to 
respond to after today's meeting.
    Mr. Clay, would you have any questions?.
    Mr. Clay. I would like to start with Mr. Paz. Your 
testimony was pretty compelling, and I know that a major 
concern within your industry is that many States have different 
E-prescribing standards that are not uniform with Federal 
standards authorized for Medicare. Please explain to us how 
this impacts your business and services provided. Is 
legislation required to harmonize Federal and State standards 
as some have proposed, or are current HHS E-prescribed 
standards adequate to meet the needs of our----
    Mr. Paz. Yes, Congressman Clay. In response to your 
question, I would say that there are several limiters for 
physician adoption of electronic prescribing. One that is often 
cited is that of trying to get a universal standard, because 
the concern is that to the extent that the one that exists in 
the Medicare Modernization Act doesn't necessarily comport with 
all State laws. It has to be--it has to fit both of those two 
different standards. As you know, the State pharmacy boards 
often regulate those type areas and impact on the legislation 
that's ultimately passed.
    And when we look at that, we see that many different 
physicians are more reluctant to adopt the technology because, 
again, they don't want to go through the cost and the hassle of 
implementing if in fact they don't know for sure what the 
ultimate end game is going to be. I think if we could 
standardize the end game, we have a much better chance of 
getting adoption by the physicians.
    Mr. Clay. How about in your business, the interoperability 
between you and your competitors? Is that easy for you-all to 
communicate, to do comparison of E-script, I guess, with your 
patients and maybe you-all have common patients, share 
patients, can you all communicate now?
    Mr. Paz. Yes, us and our two largest competitors. There are 
three large prescription benefit managers in the United States: 
Express Scripts, Medco Health Solutions and Caremark. The three 
of us have come together and standardized the process through 
an entity call RxHub which we each have funded in order for it 
to help identify a standard process in this vein. So to the 
extent that you are a member or your prescription is managed by 
any one of the three of us, that data is there. It is on the 
standardized format. Any type of device that accesses that data 
can go into the RxHub and find out which of our different plans 
actually exist, and from that we can gain eligibility data, 
prescribing information on that individual, a whole wealth of 
data that can really have a very positive outcome on that 
member's--that patient's ultimate health outcome.
    Mr. Clay. Thank you for the response.
    Dr. Crane, we have just passed the first anniversary of 
Hurricane Katrina, and in a few days we will mark the fifth 
anniversary of the 9/11 attacks. One of the lessons that we 
learned from these national tragedies is that in case of a 
terrorist attack or a major national disaster, emergency 
responders are hampered by a lack of information and inability 
to communicate with each other quickly. From the homeland 
security perspective, in a national emergency, how valuable 
would a secure national electronic health records network be 
for emergency room physicians and other medical providers?
    Dr. Crane. I would think again, it would be extremely 
valuable, Congressman Clay, to be able to access patient 
information like that in such situations. I would say that I 
think the issue of disaster preparedness is more complicated 
than that. We had the experience here in St. Louis after 
Katrina. While we weren't directly affected, we mobilized and 
staffed a command center out at the airport, and that was a 
demonstration to me, again, of perhaps there were opportunities 
to improve our preparedness just to be able to manage and staff 
a facility such as that, mobilize the manpower, for example, to 
be able to staff such a facility. And recently we had a severe 
heat wave and power outage in the St. Louis area and I think we 
did a little better that time around. There were some of the 
emergency rooms in the area that stopped accepting new 
patients, some hospitals that had to stop admitting new 
patients, and we learned some lessons from Katrina. But I 
believe there is still opportunity to improve.
    To answer your question, I think, again, it could be 
extremely valuable. We have to make sure that the system not 
only exists but they can be operated in emergency situations. 
You have to have redundant facilities. And one of the concerns 
in this area would be an earthquake. So wherever that 
information is housed is impacted, again, having a system in 
and of itself is not very helpful.
    Mr. Clay. I am sure your experience with the Katrina 
evacuees was very difficult to piece together their medical 
history once they arrived here.
    Dr. Crane. Absolutely.
    Mr. Clay. Thank you very much.
    Mr. Porter. I want to talk about one of the success stories 
for the moment of Katrina, and in the hours before Rita, Blue 
Cross Blue Shield transferred about 800,000 of their insurer's 
files from manual to electronic data form literally in 4 days. 
That's true of the success of the industry, 800,000 in 4 days. 
I know that concern about losing files in that natural 
disaster. And I know you mentioned Homeland Security and how 
critical that is.
    We experience a challenge in our community of Nevada with 
40 million visitors a year in a State of about 2.2 million 
people. Of course, a lot of folks who travel aren't sure about 
all their health information. And I've had a number of meetings 
and hearings in Nevada, and if I could mention Colorado, but 
probably 10 to 12 percent of the visitors to our emergency 
rooms in Nevada are visitors for different reasons. 
Unfortunately a lot of folks don't know what their information 
is. And as I mentioned in my opening statement, may not even be 
conscious for some health related reasons. So it is difficult.
    What I saw today at Barnes-Jewish Hospital is really an 
example of where we need to be around the country. I know that 
a lot of companies don't have the ability--or healthcare 
providers don't have the ability to do what the hospital has 
done here, but it truly is an example. If more of those in the 
private sector would do what the hospital is doing here, we 
wouldn't need to be having hearings by the way because they 
have done a tremendous job.
    But a concern that I have is privacy. I hear all the time, 
especially as we are looking at the Federal employees, with the 
employee labor organizations, and they are very concerned. I 
know that we trust our banks and our financial institutions and 
our ATM machines and maybe we shouldn't but we do. We trust 
that information when we enter--when I check on my mortgage or 
check on other financial tools that I have, I go to the Web. I 
am wondering in healthcare, probably one of the bigger areas of 
concern is if you are in a hospital bed and there is a chart 
sitting outside your door, there really is access to 
information, and I think what we learned at least this morning, 
a Xerox machine can copy a lot of papers in a hurry so there is 
not a whole lot of privacy, even though they try in a hospital 
setting. But I guess my question has to do with how we can 
eliminate some of these fears on the security side. Can we 
trust our financial institutions? It seems to me the only one 
that has all of our health information--or the only one that 
doesn't have the health information is the individual. 
Everybody else has it. But what can we do to provide more 
security? I know this is your area. Could you help us a little 
bit, Mr. Rothstein?
    Mr. Rothstein. Yes. I would be happy to try. I think 
security is a major concern of the public. And actually if you 
see polls or do them yourselves as I have done of the public 
and you ask them are you concerned about health privacy, they 
tell you, yes, I'm worried about somebody hacking into my 
records. So what they associate as privacy really is, as you 
mentioned, security.
    There are all sorts of technological proposals and possible 
solutions to make them more secure. But you raised, I think, a 
very good point relative to, how do you build the public's 
confidence that whatever measures we would come up with really 
do work. That I think takes a major effort that we have not yet 
been willing to undertake.
    For example, when we enacted HIPAA and put the privacy rule 
into place, there was very little in the way of public and 
professional education. If we don't do a better job with the 
NHIN, then I'm afraid we'll have all these doubts that you 
suggested might occur. And so the public really needs to have a 
degree of confidence that their records will not be wrongfully 
disclosed. The only way we can do this is to make sure that 
people have a role in formulating what the rules are and also 
that they get good information about what the protections are 
that are in place.
    Mr. Porter. I guess what concerns me is that, again, my 
information is available to the world right now. I can't get it 
as an insurer or a patient, but everyone else can get my 
information. It seems to me that we can put in technology 
safeguards where actually I could see the information for once, 
and not unlike Barnes-Jewish where there is a log of anyone 
that checks in, any information there is a log, and anyone that 
checks in has to have the proper credentials, it seems to me 
that we can provide that protection, but why is it that we 
trust our banks but we would not trust our healthcare?
    Mr. Rothstein. Well, I think for many people healthcare 
information is conceived of being even more sensitive than 
financial information. You have some kinds of illnesses that 
are tremendously stigmatized and that, for example, could 
result in someone losing their ability to get health insurance 
or life insurance or employment or all sorts of other things. 
Or they fear this, whether it will actually happen or not. So I 
think health information is sort of in a special category that 
people are more worried about. And also, it is much more 
complicated and complex than financial information. It goes 
over a long period of years and it has many different 
dimensions than most people's financial information. And I 
think what happens to that, people don't really understand.
    Mr. Porter. With our financial records, if the credit 
reporting is wrong, we fix it. With healthcare, we have no idea 
what information they have and they could be providing improper 
information now because we don't know what it is.
    Mr. Rothstein. That's right, and under the privacy rule you 
have a right to suggest corrections, but you don't have a right 
to make those corrections. And, in fact, many healthcare 
providers have informally or formally adopted the policy of 
never making corrections to records because they think it is 
going to be a bad precedent. So they will take you--if you want 
to put something in your file, fine, but we are not changing 
what's already in our file, even if it misidentifies a person 
or has somebody else's lab results, they tend to stay in there 
and you can object and suggest a correction.
    My main concern about privacy is the scope of the 
information and who gets it. There are lots of people who have, 
that is third party entities, not healthcare people, who have a 
legitimate interest in individual's health information, but not 
the comprehensive cradle to grave healthcare information. We 
currently have no way of restricting the amount of information 
that is disclosed. So as a practical matter, even if I have an 
enlightened employer or an enlightened insurance company and 
they say send me Mark's healthcare information that's related 
only to this topic, don't send me the rest, there is no way to 
do that. I am concerned that we are putting into effect an 
electronic system that doesn't have that capacity either. The 
amount of information that will be disclosed is going to be 
much more great.
    Mr. Porter. I think there is presumption and reality and I 
think they are two different issues, but do you think there is 
the ability to protect this information if done properly.
    Mr. Rothstein. I think there is. Unfortunately, we haven't 
spent any money in the private or public sectors researching 
and trying to develop the technology that would allow us, for 
example, to develop what's called contextual access criteria. 
This was one of the recommendations of the National Committee 
on Vital Health Statistics, the secretary in our June letter, 
and what this would do, this would be a way of designing 
information to segregate it into various categories, and so 
that when someone says I have a Workers' Compensation claim 
that was filed, then the orthopedic information and so forth 
would go and other kinds--I'm told in a hearing from the 
designers of the NHIR, this could be done, but there is no push 
to do that.
    We also think that there should be in the healthcare uses 
role-based access criteria. Now, most of the integrated 
healthcare systems such as Wash U, and I assume this is the 
case and I am assure Dr. Crane will correct me, even though the 
people at Wash U Medical Center, if their healthcare providers 
have a right to see patient's records, they don't have the same 
right of access depending on what their job category is. So, in 
other words the food service workers don't get to see the full 
records. The billing clerks don't get to see the full records 
but the physicians do. What we've suggested is that when 
records are transported via the NHIN downstream to somebody 
else, that those protections go with them. So that records that 
are discovered or obtained through the NHIN also come with a 
capacity and the restrictions of these role-based limitations. 
Unless we built that into the system, we're going to have a 
system that provides less privacy protection than the 
individual healthcare systems that we have.
    Mr. Clay. Thank you, Mr. Chairman. Mr. Powner, we know that 
at least 50,000 Americans die needlessly each year because of 
medical errors due to incomplete or inaccurate medical records, 
lack of coordination of care between providers and unforeseen 
drug interactions. Any estimate on how many lives you think 
could be saved if we have any national health IT?
    Mr. Powner. I think when you look at the national 
statistics, it is in the tens of thousands of people that die 
annually due to medical errors. It is clear, we don't have 
exact numbers, but clearly you are talking tens of thousands 
that could clearly be affected due to the current errors that 
exist.
    Mr. Clay. Let me ask you about the NHIN that Mr. Rothstein 
just mentioned it. Can you identify the flaws in the NHIN 
planning efforts concerning issues of security, reliability and 
long-term integrity, and would you agree that the NHIN, once 
created, should be considered a component of our Nation's 
critical infrastructure, isn't it no different in concept than 
an electric grid serving a region.
    Mr. Powner. Representative Clay, first of all, when you 
look at the NHIN it is currently in a prototype phase, so it is 
unclear exactly what the security measures will be. I know 
that's being looked at and I know Mr. Rothstein referred to 
that.
    It is important, though, when we look at the NHIN that we 
build security in. We focused on security standards. We 
engineered in up front many years of looking at information 
security at the Federal agencies. That's one of the big 
problems, we don't engineer it up front and then we pay 10 
times later down the road after we found out about the security 
vulnerabilities. So that will be key going forward when we look 
at our approach for the NHIN.
    Now, your question in regards to critical infrastructure 
protection: Public health in the healthcare industry since the 
mid 1990's has been considered critical infrastructure along 
with the electric power grid, with our transportation systems, 
with chemical infrastructure. That's been called for in 
Presidential directives and Executive orders as well as laws 
that currently exist with Homeland Security.
    The healthcare industry, similar to what we are discussing 
here, is behind the curve when it comes to securing our 
critical infrastructures. Public health, clearly when you look 
at public health perspectives, that's critical infrastructure. 
Those of us who work in the critical infrastructure arena are 
very concerned about--when it is not a natural disaster but if 
it is a terrorist activity and you have a physical attack and 
then you attack the response mechanisms. So we talked about the 
benefits with Katrina where we have electronic health records 
that are now automated. If you actually had some cyber 
disruption, that could really wreak havoc. So clearly it should 
be considered critical infrastructure, but clearly the industry 
needs to move forward as our electric industry, the chemical 
industry and some of the others in advancing security in terms 
of critical infrastructure protection.
    Mr. Clay. Thank you. Mr. Green, a question. As a member of 
the AHIC panel, and since HHS declined to provide a witness 
today, I thought I might ask you a question about the panel 
activities. The AHIC (inaudible) for HHS to review and accept. 
These include standards for secure messaging, lab information 
transactions and certification of vendor products. As an AHIC 
participant, can you update us on the status of the 
recommendations and if the final standards have been developed.
    Mr. Green. Representative Clay, I will sort of point out, I 
am not the best person to speak to this. But I can say that we, 
as members of the work group on consumer empowerment and being 
involved in the program that the standards--all of the 
recommendations that came from the work group require that 
standards be in place in order for many of the initiatives to 
be underway. It is my understanding that the first set of 
standards are scheduled to be issued this month.
    Mr. Clay. Thank you for that response.
    Mr. Porter. I have one additional question. What do you 
think--from the Federal side, what do you think we need to do 
to help expedite the implementation of the HIT across the 
country? What else can we do?
    Mr. Powner. Mr. Chairman, I think a couple things here. 
First of all, we need a clear strategy, a game plan going 
forward. We need a clear strategy going forward. Your focus is 
on leveraging, the Federal Government, we clearly need to do 
that. We need to create incentives for the private sector to 
participate and partner. I think it was mentioned by several of 
our panelists here, your legislation looking at grants and loan 
programs, that's a good one. It has been suggested that we 
offer tax incentives for providers who are implementing IT. If 
got serious about the incentives, we could help move the 
marketplace. If we got serious about leveraging the Federal 
Government as a purchaser and provider--I mean, we have 100 
million people who are provided services through Federal 
healthcare programs. That would do a lot. Those would be the 
key items.
    Mr. Porter. What do you think, Mr. Green?
    Mr. Green. Well, of course, my view is pretty parochial. 
I'm more interested and have responsibility for Federal 
employees and retirees and their families and their healthcare. 
But I do support the idea that the government should lead by 
example, and the Executive order that the president signed, the 
legislation that you each have proposed would help forward 
that. We are very large purchasers. My understanding is that 
one-quarter of all U.S. citizens have health insurance through 
the Federal Government, so that can drive the marketplace. And 
of course, the reason that we are interested and we are doing 
this, is because it is--makes good sense for our program and 
for our enrollees. So hopefully if that can also further the 
overall effort, that's even better.
    Mr. Porter. Thank you.
    Mr. Clay. Thank you, Mr. Chairman. Mr. Paz, just kind of a 
final question that may help summarize some of what we heard 
today, we are hopeful that this national health IT system could 
save at least $80 billion per year in precious healthcare 
dollars. What impact would that money have if applied to 
closing the healthcare disparities gap among minorities and 
low-income Americans, and could be savings that also provide a 
way to help cover the 46 million Americans who don't have any 
health insurance. I don't know if you have given that any 
thought, but if you have, could you shed some light on it for 
folks.
    Mr. Paz. Absolutely, Congressman Clay. A couple things. 
First of all, to digress just slightly, since we are on the 
anniversary of the hurricane last year, I think it is important 
to note the value of electronic data and what exists today. 
When we look at what happened in New Orleans and the 
surrounding areas, many of the people were displaced. Many 
diabetics without insulin, many people in need of their heart 
medications. We at Express Scripts worked through the Labor Day 
weekend and worked with many of the boards of pharmacies. The 
States did a fabulous job, in my opinion, and also working 
together in order to relax those standards which require before 
a prescription can be dispensed that they could go back and 
look at our prescription drug data. So as an example, an 
individual who might be in Oklahoma City or here in St. Louis 
or in Minneapolis or anywhere else in the country, if we could 
show that person had an insulin prescription delivered within 
the last 6, 8 months, same thing with different medications, 
that the boards of pharmacy waive those rights so they didn't 
have to find a local doctor to write a prescription. I think 
that's a small testament to what actually--both the States 
working together with the private sector in order to develop 
solutions for people that were in great need. But it did take--
it did utilize the electronic information that exists today. 
Now, to the extent that we can make that even more robust and 
get it in the hands of the prescribing physician, I think there 
is a tremendous opportunity here.
    With respect to saving money, at Express Scripts, some of 
the studies that we have done, we believe that there could be a 
generic fill rate in excess of 70 percent in the marketplace 
today. On average, that number is running slightly north of 50 
percent. For every 1 percent reduction means about a 1 percent 
reduction over all drug trends. Many physicians are influenced 
by the pharmaceutical manufacturers and the very expensive 
branded products coming to market. Sometimes those are 
required, but often the generic solutions are quite--are quite 
sufficient.
    I think to the extent that we can utilize that information 
that exist today to inform the physician of the opportunities 
that exist out in the marketplace, it could free up 
significant--millions and millions of millions of dollars to 
then further help with those areas that you referenced, such as 
the needs of the uninsured. We still have multiple, multiple 
layers of uninsured that exist today. And again, through the 
use of generics and other medication and access opportunities, 
I think it will go a long way to improving the health of 
millions of Americans today.
    Mr. Clay. Thank you for that response. And my time is up. I 
want to thank the entire panel for your testimony today. You 
have certainly shed some light on this important subject.
    I want to also thank my constituents and those in the 
audience. I would love to hear from all of you here by e-mail, 
telephone, letter, and even verbally on your thoughts on health 
IT so that we can address it in a very adequate way that may 
relieve some of your fears, if you have fears, about the 
subject. And again, I want to also thank the chairman, Jon 
Porter, for being here and the entire staff of the government. 
Thank you very much.
    Mr. Porter. Thank you. And I think your last question 
summarized it really quite well. No. 1, we want to save money. 
Healthcare--we want to continue to have the best in the world, 
but we also want every man, woman and child to have access so 
it is not a have-and-have-nots issue. And that's why we are 
also working on some technology for Medicaid recipients. That's 
critical with some projects. We have $150 million I think we 
approved this year to help in Medicaid so everyone can have 
access to health technology. And I think some of the Medicaid 
recipients probably need as much as anyone because of the 
moving around and different communities. We want to make sure 
that information is available. As we want to save money, we 
also want to make sure that people have ownership over their 
healthcare. I think with ownership we are going to have far 
fewer health problems. We are going to be more proactive. And I 
think it is important to mention, it will save lives. 700,000 
injuries related to healthcare accidents from improper 
prescription to information and close to 80 or 90,000 lives.
    So we know what the problem is. I think what we have to 
find is a solution to the privacy issue, has to be done sooner, 
it has to be done fast. Delivery, we have so many test projects 
around the country, I think it is a time that we can stop 
testing things, stop talking about things and that's part of 
the reason that Lacy and I are here today. We want to take 
action, find solutions. Again, there is the Katrina example, 
Blue Cross/Blue Shield, there is insurance carriers and there 
is Barnes-Jewish and there is HCA in Nevada. So I think really, 
Mr. Powner, you said it well, we need a very defined mission 
and goal and we need to get the job done; a clear vision. 
That's why we are here today. So I thank again, Mr. Clay, you 
and your staff for your hospitality. I think that this is a 
first-class facility here at the university. Thank you to the 
folks at Washington University. To the witnesses, thank you for 
traveling, those that did. And to students that are here today, 
we need your help as we move forward. And one other individual 
I want to thank, Frank Taylor, where did he go? Frank, thanks.
    So with that, the meeting is adjourned and the members of 
the committee will have additional time to submit their 
questions and we will be forwarding some to you as witnesses. 
Thank you all very much for being here. The meeting is 
adjourned.
    [Whereupon, at 2:38 p.m., the subcommittee was adjourned.]
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