[Senate Hearing 109-1129]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 109-1129
 
                     HEALTH INFORMATION TECHNOLOGY

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

                                HEARING

                               before the

      SUBCOMMITTEE ON TECHNOLOGY, INNOVATION, AND COMPETITIVENESS

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 30, 2005

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation



                  U.S. GOVERNMENT PRINTING OFFICE
65-909                    WASHINGTON : 2011
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing Office, 
http://bookstore.gpo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Printing Office. Phone 202ï¿½09512ï¿½091800, or 866ï¿½09512ï¿½091800 (toll-free). E-mail, [email protected].  

       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                     TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona                 DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana                    Chairman
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA J. SNOWE, Maine              JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon              BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada                  BARBARA BOXER, California
GEORGE ALLEN, Virginia               BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire        MARIA CANTWELL, Washington
JIM DeMINT, South Carolina           FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana              E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas
             Lisa J. Sutherland, Republican Staff Director
        Christine Drager Kurth, Republican Deputy Staff Director
                David Russell, Republican Chief Counsel
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
   Samuel E. Whitehorn, Democratic Deputy Staff Director and General 
                                Counsel
             Lila Harper Helms, Democratic Policy Director
                                 ------                                

      SUBCOMMITTEE ON TECHNOLOGY, INNOVATION, AND COMPETITIVENESS

                     JOHN ENSIGN, Nevada, Chairman
TED STEVENS, Alaska                  JOHN F. KERRY, Massachusetts, 
CONRAD BURNS, Montana                    Ranking
TRENT LOTT, Mississippi              DANIEL K. INOUYE, Hawaii
KAY BAILEY HUTCHISON, Texas          JOHN D. ROCKEFELLER IV, West 
GEORGE ALLEN, Virginia                   Virginia
JOHN E. SUNUNU, New Hampshire        BYRON L. DORGAN, North Dakota
JIM DeMINT, South Carolina           E. BENJAMIN NELSON, Nebraska
                                     MARK PRYOR, Arkansas


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 30, 2005....................................     1
Statement of Senator Allen.......................................     9
Statement of Senator Ensign......................................     1
Statement of Senator Kerry.......................................     8

                               Witnesses

Basch, Dr. Peter, Medical Director, eHealth Initiatives, MedStar 
  Health.........................................................    61
    Prepared statement...........................................    63
Bostrom, Susan L., Senior Vice President, Internet Business 
  Solutions Group and Worldwide Government Affairs, Cisco 
  Systems, Inc...................................................    51
    Prepared statement...........................................    54
Brailer, David J., M.D., Ph.D., National Coordinator for Health 
  Information Technology, Department of Health and Human Services    20
    Prepared statement...........................................    23
Clancy, Carolyn M., M.D., Director, Agency for Healthcare 
  Research and Quality, Department of Health and Human Services..    12
    Prepared statement...........................................    15
Enzi, Hon. Michael B., U.S. Senator from Wyoming.................     3
Glaser, John, Ph.D., Vice President/Chief Information Officer, 
  Partners Healthcare............................................    56
    Prepared statement...........................................    58
Ignagni, Karen, President/CEO, America's Health Insurance Plans..    77
    Prepared statement...........................................    79
Kolodner, Robert M., M.D., Acting Chief Health Informatics 
  Officer, Veterans Health Administration, Department of Veterans 
  Affairs........................................................    35
    Prepared statement...........................................    38
Pure, Pamela, President, McKesson Provider Technologies, 
  Executive Vice President, McKesson Corporation.................    71
    Prepared statement...........................................    73
Semerjian, Dr. Hratch G., Acting Director, National Institute of 
  Standards and Technology, Technology Administration, Department 
  of Commerce....................................................    27
    Prepared statement...........................................    29
Stabenow, Hon. Debbie, U.S. Senator from Michigan................     5

                                Appendix

Advanced Medical Technology Association (AdvaMed), prepared 
  statement......................................................   125
eHealth Initiative and Foundation, prepared statement............   104
Institute of Electrical and Electronics Engineers--United States 
  of America (IEEE-USA), prepared statement......................   115
McNamara, Pam, Chief Executive Officer, CRF, Inc., letter, dated 
  July 7, 2005, to Hon. John Ensign..............................   118
Pharmaceutical Care Management Association, prepared statement...   121
Robertson, Dr. Rose Marie, Chief Science Officer, The American 
  Heart Association; Professor of Medicine, Vanderbilt University 
  Medical Center, prepared statement.............................   119
Snowe, Hon. Olympia J., U.S. Senator from Maine, prepared 
  statement......................................................   103
Thomas, D.O., George, President, American Osteopathic 
  Association, letter, dated June 27, 2005, to Hon. John Ensign..   114


                     HEALTH INFORMATION TECHNOLOGY

                              ----------                              


                        THURSDAY, JUNE 30, 2005

                               U.S. Senate,
       Subcommittee on Technology, Innovation, and 
                                   Competitiveness,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:30 a.m. in 
room SR-253, Russell Senate Office Building, Hon. John Ensign, 
Chairman of the Subcommittee, presiding.

            OPENING STATEMENT OF HON. JOHN ENSIGN, 
                    U.S. SENATOR FROM NEVADA

    Senator Ensign. Good morning. I would like to call the 
Subcommittee to order and welcome everyone to today's hearing 
on health information technology. I think we have an exciting 
topic to discuss this morning. I'm excited about our panels, 
and am especially interested to hear from my two colleagues 
that are here to testify today. I would like to begin with an 
opening statement. When Senator Kerry arrives, we will turn to 
him for an opening statement, and then we will hear from our 
first panel.
    Fragmented, disorganized and inaccessible clinical 
information, adversely affects the quality of healthcare and 
compromises patient safety. The Institute of Medicine estimates 
that as many as 98,000 Americans die each year from medical 
errors in hospitals. Many more Americans die or have permanent 
disability because of inappropriate treatments, or 
mistreatments. Furthermore, studies have found that as much as 
$300 billion is spent each year on healthcare that does not 
improve patient outcomes--treatment that is unnecessary, or 
ineffective. Health information technology, which is used to 
collect and store clinical, administrative, and financial 
health information electronically, is a major part of the 
solution to this problem. Technology such as electronic health 
records, and bar coding of prescription drugs have been 
proposed as means to lower healthcare costs and reduce medical 
errors. We need to explore these areas.
    We are constantly working on new ways to enhance and 
improve the field of medicine in the 21st century. But 
efficient, quality patient care is often compromised because 
physicians and nurses still communicate vital information 
through handwritten notes. Medical orders and prescriptions are 
handwritten and far too often they are misunderstood or not 
followed in accordance with the physician's instructions. 
Patients often have multiple providers. In addition to seeing 
their internist, patients often schedule appointments with 
cardiologists, endocrinologists, rheumatologists, and other 
healthcare professionals.
    In this outdated paper-based system, a patient's medical 
information is scattered across medical records kept by 
numerous care givers in many different locations. As a result, 
all of the patient's medical information is often unavailable 
at the time of care. This is completely unacceptable. I believe 
we need to begin transforming healthcare through information 
technology. The development and adoption of interoperable 
electronic health records is an important step that can be 
taken to improve quality of care and reduce costs.
    An electronic record is almost never lost or misfiled. It 
is almost always exactly where it should be, even if you are 
not. This means that an electronic record may be accessed from 
any point in the healthcare system. So if you are traveling in 
my home State of Nevada and you get sick or get in an accident, 
a physician can instantly obtain medical information, such as 
allergies, medications, and prior diagnoses, to determine how 
best to treat you.
    Electronic health records can also help ensure that 
physicians have the information they need to make appropriate 
clinical decisions. Because of the rapid growth of medical 
information and new treatment methods, physicians must 
accumulate a large volume of new knowledge in a short period of 
time.
    Information overload is, in general, an occupational 
dilemma that has been complicated by wide variability in 
treatment methods and patient care across geographic regions. 
Best practices serves as a guideline for prevention or 
treatment of a certain disease or condition. They consist of 
quality-improving strategies which bring together the best 
external evidence and other knowledge necessary for informed 
decisionmaking about specific healthcare problems. These 
guidelines can be easily incorporated into health information 
technology.
    Clearly health information technology has the potential to 
revolutionize the U.S. healthcare system. If properly 
implemented, health information technology will reduce 
duplication, and cut down on administrative costs, such as 
transcription and billing. In addition, this technology will 
reduce medical errors and potentially reduce medical liability 
insurance premiums for physicians and other healthcare 
professionals.
    I am eager to hear about the current state of health 
information technology in both the public and private sectors. 
It is my hope that this hearing will help us understand what we 
need to do to create a more affordable, efficient, and high-
quality healthcare system in terms of patient care and safety. 
I look forward to the expert testimony of our distinguished 
panel of leaders in various Federal agencies, and the industry.
    With that, I want to start with our first panel. We will 
begin with the Chairman of the Health, Education, Labor, and 
Pensions Committee, on which I have the honor of serving. 
Chairman Enzi is doing a magnificent job taking on all aspects 
of healthcare and how they affect our society and the reforms 
we need to make.
    So Chairman Enzi, we will hear from you and then we will 
hear from one of my classmates, my colleague from Michigan, 
Senator Stabenow. Senator Enzi.

              STATEMENT OF HON. MICHAEL B. ENZI, 
                   U.S. SENATOR FROM WYOMING

    Senator Enzi. Thank you Mr. Chairman, I really appreciate 
you holding this hearing today. It is one of the most exciting 
things happening in America right now. It has the most 
potential for helping people of anything in America. And you've 
recognized that, and called this hearing. And of course I need 
to recognize that you're also the Chairman of the Senate 
Republican High Tech Task Force which has had a vital interest 
in this. And you do serve on my Committee and you contributed 
part of the bill that we'll be introducing later today that 
deals with information technology. In fact the whole thing is 
about information technology.
    There are some amazing things that are about to happen. We 
have got the tools already, we just haven't done the 
applications, and one of the reasons we haven't done the 
applications is there isn't a common set of standards. And I've 
been working with Senator Kennedy who is the Ranking Member of 
my Committee and we've been working on with the Finance 
Committee because there are some finance pieces on this, and 
Senator Grassley, and Senator Baucus have been doing some 
tremendous work on it, and we have been working with the White 
House through Secretary Levitt who has been very involved in 
informational technology for a long time. He was one of the 
founders of the Western Governors University, which is an 
online university for people who can learn anywhere in the 
world. You can even get your diploma online with that. But that 
was a little invention from 9 years ago, and it's transformed 
dramatically. There is no reason that this won't be the next 
really dramatic change.
    And one of the reasons is that healthcare expenditures are 
a vast part of our economy. In 2003, we spent than $1\7/10\ 
trillion, I have trouble with that number. One and \7/10\ 
trillion dollars on healthcare. By 2014 that number is expected 
to exceed $3\1/10\ trillion. Clearly we need to find ways to 
increase the efficiency of our healthcare system, we are 
looking at a number of bills, in our Committee in fact, we're 
working on 18 bids for bills now that will increase access, 
increase quality, and hopefully reduce costs.
    We would like to dramatically reduce costs, we may have to 
settle for slightly reducing costs, but it would be a huge 
thing if we were just able to control costs. Now if we could 
manage a quick trip into the future, and pay a visit to the 
doctor's office with a health information technology system put 
in place, we could see dramatic changes made in the ability for 
doctors to diagnose, treat and provide warnings of current and 
future medical problems. Somebody said to me that right now, if 
you have surgery in a hospital, that can probably happen faster 
than getting your records from one hospital to another. When 
people go into a physician's waiting room, the first thing they 
have to do is get a little clipboard and by hand, write down 
all of their medical information. I don't know how many people 
out there can remember all of the their medical information and 
most of us don't even know what all of our medical information 
is. Right now, there are little devices like this that will 
plug into any computer in the world, and that can hold your 
entire medical record. When you go to a gas pump you can run a 
little key fob across the pump and that will access your 
ability to get gasoline, pay for it, and you can drive off. 
There isn't any reason we shouldn't we be able to check into a 
doctor's office that same way; and provide them with all of the 
information that he needs to be able to take care of us. One of 
the things that always worries me, is that being out here in 
the East, what if I'm in a car accident? Where do they get my 
records from?
    Now I'm in a position where it's a little bit easier to do 
that, but the average person that is out here visiting doesn't 
have any records out this way, and my records are partly here 
and partly in Wyoming. So how do I know that the emergency 
physician will know enough about me to be able to treat the 
visible thing as well as the invisible? And there's no reason 
in today's economy with today's technology that that doesn't 
happen, except there aren't common standards. So one of the 
things we'll be doing is putting together some common 
standards, and as I mentioned we're working with Secretary 
Levitt and he has developed an excellent program through 4 RFPs 
that works with private sector and I think this will happen 
faster than anyway that we ever put it, just in government 
hands.
    And so we're on the verge of being able to do a lot of 
things with technology that we never imagined before. I have to 
mention a little invention in Wyoming, there's a doctor out 
there named Dr. Close. He's Glenn Close's dad, he spent most of 
his life in Africa studying ebola. But he is retired now so he 
is running a family practice in Big Piney, Wyoming. And I mean 
a family practice, this guy makes house calls, and he sits with 
people while they're dying. It's a level of care that we 
haven't seen before, but one of the things he discovered when 
he was in Africa, and even now, is that it would be really 
helpful to have a little more confirmation on diagnosis. And he 
talked to some programmers about it, and they went to work on 
it, and there now is a program that fits in a Palm Pilot, or a 
BlackBerry, and the Navy uses it on submarines. So that the 
medical technician that is on the submarine, when he has 
someone that has a problem can feed in the symptoms that he 
sees, have a list of questions that help to narrow down what 
the possibilities are and help to confirm a diagnosis. Before 
they had that little program, the submarine had to surface, 
they had to make radio contact with the information, keep 
asking questions back and forth, so the sub of course was 
exposed for a while, but the cost alone of the bringing that 
sub to the surface for the year previous to getting to the 
BlackBerries was costing $600,000. Now that isn't necessary 
because of technology.
    So we haven't begun to imagine the kinds of things that 
we'll be able to do through technology, and we need to take 
that first step to get it in place, to build some encouragement 
through incentives in, and I'm certain that the private sector 
will run with this, as we get things developed.
    So I do appreciate your looking at this issue, finding out 
the ways--stimulating people to new ideas, and in the months to 
come we'll continue to encourage the participation of the 
private sector. They've asked for, and I believe they deserve a 
seat at the table when standards are being done since that is 
also the area where ideas will be generated. Suggestions for 
innovation will come forth and those will all be invaluable as 
we do this.
    So the bill that we will be introducing later today, and I 
want to thank virtually all of the Senators I think, for 
contributing ideas to it. There have been a number of bills 
that have been written, this is one of the most exciting areas 
right now in health and there is a tremendous interest. It is 
time that we did something with it. And we can continue to make 
healthcare services more affordable, more available and without 
it, we run the risk of having the best healthcare system in the 
world with few of us who can take advantage of it through 
affordability. So I want to work with you, and ensure that the 
healthcare technology is signed into law later this year. 
Thanks for your help on the bill and your participation, and 
for having this hearing today.
    Senator Ensign. Thanks Mr. Chairman, Senator Stabenow.

              STATEMENT OF HON. DEBBIE STABENOW, 
                   U.S. SENATOR FROM MICHIGAN

    Senator Stabenow. Good morning, thank you, Mr. Chairman, 
for holding this very important hearing on a very exciting 
topic. I share Senator Enzi's enthusiasm and optimism about our 
ability to work together and really get something done, and I 
would just as an aside indicate that I've enjoyed working with 
Senator Enzi on a number of projects through the Banking 
Committee, and know that when he is involved in it, we're going 
to be in good shape. So I appreciate the chance to work with 
you again.
    I also want to just put a plug in, in terms of the private 
sector. I couldn't agree more that there is an important 
partnership that needs to take place. We know that in the 
private sector investments have been made in technology; we 
need to support those investments by providing Federal 
financial incentives. Automation Alley, a technology consortium 
in southeast Michigan and Detroit, is doing exciting work in 
this area. They are partnering businesses, universities, and 
governments to use health information technology to help bring 
our healthcare systems to the point where they should be. And 
Senator Enzi was talking about a key fob. I just have to brag 
and say the automobile I drove in today, which is a Cadillac 
STS, does not use a key, it uses a fob. I leave it in my 
pocket, I get in and out of my car, push a button to start the 
vehicle. That level of technology is the kind of technology 
that we can bring to our healthcare system and that is what 
we're really here today to talk about.
    I also want to thank my colleague Senator Snowe who is a 
Member of the Full Committee. She and I have been working 
together and have introduced health information technology 
legislation. I'm hopeful that we can, through the leadership of 
everyone involved, bring together all of the legislation and 
get the best ideas together and be able to pass a 
comprehensive, bold approach that will really get the job done. 
I'm very proud that Senator Snowe is working with me on this 
legislation. We have announced a health IT caucus that we 
welcome and invite everyone to be a part of, so we can all work 
together on this very important effort. The evidence showing 
the ability of health IT to reduce costs, save lives, and 
improve quality of care is simply overwhelming, Mr. Chairman, 
as you know, and as you indicated in your comments.
    I was thinking as you were talking about going from one 
facility to the other of a story that a businesswoman told me 
about a couple of weeks ago. She came in with the Small 
Business Association, we started talking about health IT, and 
she told the story of her son who is disabled, and how she 
lives up north in Michigan, goes down to Ann Arbor to 
Children's Hospital, goes to different places. She actually 
carries her records with her. Stacks, and stacks, because she 
is worried that one hospital will not have the full records of 
the other facility, and so she actually carries a huge file 
with her, and we want to help her not have to do that.
    Dr. David Brailer, who is the National Coordinator for 
Health Information Technology, is speaking to the Committee 
this morning, and has been instrumental in making evidence 
known and understood about this issue. His office attributes 
savings from widespread adoption of electric health records in 
the range of seven and half percent to thirty percent in annual 
healthcare spending. Which is amazing. It just is amazing. 
Given that U.S. health expenditures amounting to $1.8 trillion 
in 2004, we're talking about savings anywhere from $135 billion 
to $540 billion a year, and even here that is real money. And 
so this is why this is so important.
    Manufacturers in Michigan and across the country are 
struggling right now to remain competitive in a global 
marketplace with skyrocketing healthcare costs, and we know 
that health IT can, and should, play a key role in managing 
these costs, as well as our costs at the Federal Government 
level and for every family and every business. We really can 
reduce costs without asking healthcare providers, or patients, 
to take less. We really can, by this strategy. That would be 
reason enough for an aggressive Federal role in promoting 
adoption of health IT.
    But equally compelling is the promise that health IT holds 
for improving the quality of healthcare for our families, by 
ensuring that patients get the care they need at the right time 
and in the best setting. To realize these promises however, I 
believe Congress must enact legislation providing meaningful 
resources to physicians, hospitals and other healthcare 
providers for health information technology, as well as setting 
standards.
    Healthcare providers are struggling to keep up with their 
daily needs. A major barrier to the use of the types of systems 
you will hear about today is the initial investment cost. The 
cost of procuring and implementing health IT can be staggering. 
Every day we delay providing Federal seed money, we delay 
getting health information technology systems in place, and 
businesses, taxpayers, and patients pay in both dollars and 
lives.
    But for the Federal investment to really make a difference, 
there are several elements that are critical, and these are 
included in the legislation we've introduced. First of all we 
must do something substantial. We have over 470,000 physicians, 
14,000 nursing homes, about 5,700 hospitals, over 1,200 
community mental health centers, and over 1,000 community 
centers all of whom need to have this technology. We need a 
robust investment immediately so we can start reaping the 
benefits and rewards immediately.
    I also believe it needs to be real, whatever we do. We 
frequently pass great pieces of legislation that are funded 
through an authorization of appropriations from the General 
Fund. But the appropriators are hard pressed to fund existing 
programs, much less new initiatives, no matter how compelling. 
And so I hope our strategy will be to identify a source, and 
again in our legislation we have done that.
    We will spend substantially less Federal healthcare dollars 
if health IT is used by providers serving patients in Federal 
health programs. So it makes sense to finance health IT through 
the Federal Healthcare Trust Funds. It also makes sense to use 
the tax code to fast track the potential IT systems.
    I also believe it needs to be available to individual 
providers and healthcare systems.
    Again, it's critical we have standards. But at a time when 
we're asking providers to take less, it's very difficult to 
also ask them independently to make investments of the kind 
that we're talking about to be able to adopt health IT systems. 
We should work toward a system where all healthcare providers 
are linked, but we do not need to wait for those networks to be 
formed to see the benefits of health IT either. Some hospitals 
and other providers have already begun using electronic health 
records, computerized drug ordering systems, and systems that 
alert them to adverse drug problems.
    The benefits of these systems have been enormous already. I 
talked with one system with seven facilities who saved $18 
million in drug costs alone. So even before we get them 
connected, if we can get them involved and investing in health 
IT we will see dollar savings. There is no reason to delay a 
community's opportunity to benefit from the quality, the 
safety, and the financial savings of immediate health IT 
adoption by its local providers even as we are putting together 
the larger systems.
    I know that you'll hear this morning about the importance 
of interoperability. It is absolutely critical for healthcare 
providers to be able to talk to each other electronically. And 
the Federal Government has a role to play here as well in 
promoting the adoption and use of open standards. But it is not 
enough for the Federal Government to help develop standards, as 
I indicated I hope that we can be a part of the solution that 
will allow agencies to walk the walk, as well as talk the talk. 
The Federal Government must allow healthcare providers to 
submit data using open standards. Allowing data submission in a 
way that allows computer systems to talk to each other--so the 
information can be processed automatically and quickly--will 
result in better care for patients.
    CMS requires Medicare providers to submit measures on 
healthcare, but we haven't begun to get the full benefits from 
that data because providers aren't allowed to submit the data 
using the open standards that exist.
    Use of uniform standards and reporting of quality measures 
is essential. And I believe, while essential though, it is not 
sufficient. Standards and organizational efforts alone won't 
get our providers where they need to be. This is especially 
true for those who serve Medicare and Medicaid patients and 
SCHIP patients. A real Federal financial commitment is 
essential as well. And I think rarely has anything been this 
unambiguous: Federal investment in health information 
technology will come back to us many times over in reducing 
Medicare, Medicaid, and SCHIP spending, reduced medical errors, 
and greater quality and efficiency in our healthcare system.
    So Mr. Chairman, you're on the right track, and I 
congratulate you very much for your leadership, the leadership 
of everyone involved, the leadership of Chairman Enzi, and I 
look forward to working with you, and with all of our 
colleagues because I really believe that we have the 
opportunity to get this right and to make a major, major step 
forward in reducing costs and saving lives, and I can't think 
of anything more important.
    Senator Ensign. I want to thank both of you for your 
excellent testimony. Health information technology is one of 
the more exciting issues we've come across in a long time. This 
issue is exciting because it's really not an ideological issue. 
There is no reason for health information technology to be a 
partisan issue, and I'm excited about that aspect of the topic 
as well. We've all had experiences with the healthcare system. 
I received a call from my wife last night. She was at a 
pharmacy and didn't have her health insurance card with her. 
Electronic health records would be helpful in these types of 
situations. Electronic health records would help manage this 
type of information and keep track of prescription medications.
    Since the Ranking Member has just arrived, I would like to 
open it up to him for an opening statement, and then I will 
turn to Senator Allen.

               STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. Mr. Chairman, thank you Senator Allen. I 
apologize for being late, I apologize to my colleagues. Thank 
you Mr. Chairman for holding this hearing, this is--I heard you 
just as I came in, talking about how this is not a partisan 
issue, it's obviously bipartisan. But what disturbs me is that 
despite how obvious the benefits are, we don't have the 
political will evidently, or the determination to put the real 
funding which is what is so critical for our hospitals and 
health centers, clinics, et cetera to be able to invest. If 
you're struggling to pay your Medicare match, or you're 
struggling to pay your Medicaid match, and hospitals are 
already digging into their reserves, which they are, it's very 
hard to capitalize and it takes a major capitalization to be 
able to go out and put together the technology structure 
necessary to do this. I don't know who among us, I mean for the 
2 years I spent crisscrossing the country, talking to people 
all over the country, people get it. They just get it. They're 
thirsty for this, it costs you one penny, to go to an ATM and 
take whatever amount of money out of the bank and have a 
transaction. But if you go to a hospital, it costs you 
somewhere between $15 to $25 per transaction to pull a medical 
record, it's absurd.
    Who among us has not gone to a doctor's office in the year 
2005, or before that, had the assistant hand you a clipboard 
with a pencil attached. Please fill out your record. How many 
times have we filled it out? I mean you could walk in with a 
Smart Card, hand it to them, plunk, they could put it in, 
update and you could walk out with your records with full 
security today.
    There's an unbelievable amount of money that could be 
saved. President Bush has allocated $150 million total for the 
Office of the National Coordinator for Health Information 
Technology, which is going to do little more than pay lip 
service. Frankly, we've got hospitals in Boston, one of them is 
going to testify. I think individually they spend more in that 
one hospital. You're talking about a nationwide system. It's a 
joke. We don't have our priorities straight.
    Our priority in Washington is to have a great big tax cut 
for people earning more than a million dollars a year, it's $32 
billion next year, is it going to go to people earning more 
than a million dollars a year? And the hospitals I promise you 
will be struggling and they'll be back here saying why can't we 
get more funding to be able to save money.
    The fact is that out of the 44,000 to 98,000 deaths that 
were attributed to medical errors annually, that's a big 
figure, almost more people died than died in the 10 years of 
the Vietnam War due to medical error, and more than 7,000 of 
them are due to medication errors alone. One million serious 
medication errors occur each year due to drug overdoses which 
comes from the wrong drug, illegibility of doctor's orders, and 
drug allergies and so forth. These errors translate into $2,000 
in additional hospital costs per patient; two billion dollars 
annually for the healthcare system as a whole. In 1998, Boston 
Brigham and Women's Hospital was one of the first in the 
country to implement an electronic prescribing system called 
``Computer Physicians Order Entry'' and that has the ability to 
significantly reduce medication errors which in turn will 
reduce the hospitalizations that take place among seniors. One 
of the largest--the largest percentage of unnecessary 
hospitalizations come as a result of medications taken badly 
and wrongly. Brigham and Women's spent $1.9 million on the 
initial installation and about $500,000 annually for upgrades. 
The financial return on its initial investment has been $5 
million, and $10 million in annual savings. So let's understand 
that, $1.9 million invested, $5 million to $10 million in 
annual savings as a result.
    So we can do an extraordinary amount, Mr. Chairman, if we 
can really get the willpower to go out and do it. We've got to 
zero sum gain budget, we all know what we're fighting about 
right now. We had to adjust a billion dollars for Veterans 
yesterday, this is a struggle. And I really think it is 
critical to us, to try to get our priorities straight. I'm 
working with Senator Cornyn on a bill that we hopefully could 
introduce. I would like to get the Chairman, and we could all 
work together to try to do this. But it seems to me that 
there's a great opportunity for us to be able to modernize 
America, save lives, save money, and frankly do a terrific job 
of helping a number of industries create jobs at the same time, 
and be far more efficient and effective. So thank you, Mr. 
Chairman, for doing this. And I look forward to working with 
you.
    Senator Ensign. Thank you. Senator Allen.

                STATEMENT OF HON. GEORGE ALLEN, 
                   U.S. SENATOR FROM VIRGINIA

    Senator Allen. Thank you Mr. Chairman, for holding this 
hearing. I thank our two witnesses, and I share the comments 
that they will make. I will be questioning witnesses and our 
panel as we go forward, so I'll forgo a full blown opening 
statement, other than to say that you, Mr. Chairman, and I have 
worked over the years together. We want this country to be the 
most technologically advanced in the world, and we need to be 
embracing the advances in technology. Everything from 
communications to video, to broadband, and clearly here in 
healthcare.
    I think this is the most pressing achievable improvement 
that we can make in our healthcare system. There will be more 
accurate treatment for medical injuries or illness. It will 
save money, and more importantly I think that the whole issue 
of our very mobile society, that no matter where you are, or 
when you're injured you have that accurate approach. I was 
listening to Senator Kerry, and for most of--clearly, the first 
part of his remarks I would say great, Senator Kerry and I are 
together on something. And this is a bipartisan effort. We need 
not, I would say to my friend--my friends here, that we need 
not get into tax cuts, we're not going to raise taxes.
    But what we do need to do is find out the proper 
incentives, the proper funding and to me this should be a 
national priority. And I thank you, Mr. Chairman, for holding 
this hearing so that we can focus on it, hear from our 
colleagues. I've signed on as a sponsor on Senator Enzi's bill. 
But also listen to the innovators, the technologists, as to how 
we can best do this, whether encouragement, incentives, grants 
and so forth, to do it right.
    I would just ask this question of Senator Enzi, what did 
you call this thing you have hanging around your neck?
    Senator Enzi. I call it a fob, but it is a jump drive.
    Senator Allen. That's all fine and dandy. I'm not going to 
go around carrying something around my neck. And the point of--
but it is wonderful, and here's my question to you. This is 
actually leading up to a friendly question.
    Senator Ensign. I think it looks good on him.
    [Laughter.]
    Senator Allen. I don't see you wearing one, if you think 
it's so stylish.
    [Laughter.]
    Senator Allen. At any rate, the one key thing we need to do 
right here, in addition to determining what are the right 
incentives to achieve this very important laudatory goal for 
accurate, better healthcare treatment is to make sure, and you 
used the term common standards. What we develop here in this 
bipartisan manner should be a standard that clearly allows 
interoperability. There may be some who don't want to do that, 
or maybe a few years down the road, there may be a way. Just 
like we do with driver's licenses, you just put a heart on it 
in Virginia if you want to be an organ donor, not making people 
write something on the back of it, and have witnesses all the 
rest.
    Maybe there's a way, that especially with nanotechnology, 
and micro-electronics advances, that there's a chip that could 
be put on a driver's license or something smaller. But then of 
course that's going to have to interact with whatever the 
hospital or the physician's office, or the pharmacist has. So 
in your definition of common standards, how do you envision 
that being put into effect as a practical matter? Because the 
one thing that I've learned over the years is you can waste 
more money, more quickly on technology than anything else 
because there are always adaptations, always improvements with 
new innovations. We do not want to be setting up a system that 
stops technological advances and innovations because we have 
set a standard that picks just one type of technology. But we 
also ought to make sure that if there are improvements that 
they will work within the system. How would you respond to that 
concern with your legislation?
    Senator Enzi. I would respond that that is why the 
authorization amount in the President's or the budget amount 
was $125 million. We don't want to get the cart before the 
horse. Right now we don't have the interoperability of systems, 
we don't have standards for the data that is to be collected so 
that it can be shared easily. I grew up during the computer 
generation when I went to college the government was the only 
one virtually that owned computers and we had to do punch cards 
and doing the very simple program that any child could do in 
first grade now in about \1/2\ hour, would take us about 3 
days. But the computers have advanced dramatically, they've 
gotten smaller, I remember in 1980 they said that there would 
be a computer--there would be the equivalent of a computer in 
every home, by the year 2000.
    By 1990, there was the equivalent of one computer for every 
person in the United States already. And I don't know what it's 
up to now, because everybody has more than one. But the reason 
that came about was because we had some common standards for 
operating systems now, that didn't happen in the beginning 
there were about a half a dozen operating systems out there 
that worked at cross purposes partly to capture part of the 
market. And through the private enterprise system one of them 
did capture the market. But there's no reason we have to go 
through that kind of a process. We can get everybody to a 
faster starting place by having standards, putting them in 
place and then the market will be able to generate the revenues 
that are needed. One hospital that spent--I can't remember how 
many hundred--more than a $150 million already, one of the 
problems we have is we have a start to a law that prohibits the 
interaction between doctors and hospitals. And part of the bill 
takes care of that problem, so that in providing equipment and 
information they can have the interoperability without that, it 
doesn't work.
    There are a number of stages we have to go through to get 
to the point where there can be significant money put into the 
system, and there will be significant private money put into it 
as we go along. We're also trying to come up with a mechanism 
where the government can participate to be able to leverage 
private dollars. And that's the way that most of the economy 
has grown in the past and we want to make sure that that can in 
the future.
    Senator Stabenow. Mr. Chairman, if I might also just add, I 
totally share Senator Enzi's comments in terms of standards. I 
would just urge that while we are doing that which is critical, 
that we're also supporting the efforts to get the individual 
technology into hospitals and doctors offices. Because right 
now what we have is a system where providers are being cut back 
in terms of Medicaid and Medicare and so on, and it's virtually 
impossible for them to be making that initial investment. So by 
using the tax code we can allow a faster depreciation schedule, 
and thus provide a financial incentive for health IT adoption. 
We can create grants to be able to help our public hospitals 
and nursing homes, and ensure they are able to get the 
technology they need. I hope we're doing both at the same time. 
Because even using independent systems we can save lives right 
now, just by doing all that we have talked about this morning.
    Senator Allen. Thank you both. Thank you, Mr. Chairman.
    Senator Ensign. Senator Kerry, would you like to add a 
comment?
    Senator Kerry. I just wanted to comment that I hope we can 
somehow get beyond this discussion. Senator Stabenow is 
absolutely correct, and Senator Allen I appreciate the 
mutuality of support in the early part, but there's a point 
where you and others have got to kind of confront the reality 
of language. Where you say on the one hand this is a national 
priority, and then you say, but we shouldn't raise taxes. 
Nobody's talking about raising taxes. We're talking about 
whether we should give a tax cut.
    Senator Ensign. Senator Kerry, let's stay away from this 
debate. Hold on just a second. This debate can occur another 
day, and I want to get to the next panel. I want to run this 
hearing so that we hear from the experts. We started this 
hearing in a bipartisan fashion and I want to keep it that way. 
I don't want to get into the discussion of tax cuts--let's save 
that for another day. I appreciate both of the witnesses here 
today. Thank you both for your excellent testimony. I would now 
like to call the next panel to the table. Dr. David Brailer, 
National Coordinator for Health Information Technology, U.S. 
Department of Health and Human Services; Dr. Carolyn Clancy, 
Director, Agency for Healthcare Research and Quality; Dr. 
Hratch G. Semerjian, Acting Director, National Institute of 
Standards and Technology; Dr. Robert M. Kolodner, Acting Chief 
Health Informatics Officer, Veterans Health Administration, and 
Acting Deputy Chief Information Officer for the Department of 
Veterans Affairs.
    We welcome all of you. We will start from my left and go 
down the panel. I would appreciate it if you could summarize 
your remarks in 5 or 6 minutes so that there's plenty of time 
for questions and answers. This will allow us to have a good 
discussion. Your full statements will be made part of the 
record. Again, if you could please summarize your testimony in 
about 5 minutes, we'd very much appreciate it, so that we can 
have the maximum amount of time for questions and answers.
    Dr. Clancy.

        STATEMENT OF CAROLYN M. CLANCY, M.D., DIRECTOR, 
          AGENCY FOR HEALTHCARE RESEARCH AND QUALITY, 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Dr. Clancy. Chairman Ensign, Senator and members of the 
Subcommittee, I am delighted to join Dr. Brailer in outlining 
the ways in which the Department of Health and Human Services 
is advancing the adoption, implementation, and effective use of 
health information technology.
    You asked us to address how health IT can achieve three 
objectives: reducing medical errors, improving the quality of 
patient care, and reducing the cost of healthcare. Our AHRQ 
investment will help the Nation meet all three of these 
objectives. The transformation into a healthcare system that 
provides high quality healthcare reliably that meets patients 
needs will not happen just because of health IT, but it is 
impossible to imagine that that transformation can take place 
without it.
    For nearly three decades, AHRQ has funded the basic science 
of health IT by supporting the pioneers and innovators. Many of 
the Nation's leading health IT systems were founded on research 
funded by AHRQ, and our task now is to spread that knowledge 
and experience that we have gained more broadly; throughout the 
healthcare system and we also need to support research targeted 
to fill critical gaps in our knowledge.
    In Fiscal Year 2004 AHRQ announced an investment of $139 
million over 5 years to achieve these goals. This national 
initiative is now supporting 108 grants and contracts in 43 
states, with over half of the projects based in rural and small 
hospitals and clinics. All told this investment will affect 
more than 40 million Americans.
    Our efforts are detailed extensively in the written 
testimony, but I wanted to provide a few highlights right now. 
Reducing medication errors is one area where health IT offers 
the greatest and immediate potential to improve patient safety. 
In some ways, its potential value is self evident in reducing 
handwriting errors, cross checking prescribing errors, and 
identifying dangerous interactions with other medications 
before they occur. AHRQ supported the groundbreaking work of 
David Bates and others, that demonstrated a 55 percent 
reduction in serious medication errors with computerized order 
entry systems in hospitals.
    In anticipation of the Medicare drug benefit, we're now 
supporting work on electronic prescribing, and in-office 
practices. Many physicians now refer to their handheld devices 
for electronic prescribing as their peripheral brain. And so we 
find that they're as important to them as stethoscopes. Health 
IT can also greatly improve the over all quality of patient 
care by making the right thing the easy thing to do. As a 
doctor, when I see a patient who's coughing and has a fever, I 
can now use a AHRQ-funded electronic tool to help me decide 
whether that patient needs to be hospitalized. I used to have 
to go look up that information and then make a treatment 
decision.
    A hallmark of our efforts are initiatives that move health 
IT into settings where traditionally it has not been available. 
These include nursing homes, pharmacies, waiting rooms, 
schools, and patient's homes. For example, a recent effort to 
reduce bed sores in nursing homes was so successful, that a 
large chain of nursing homes has adopted the idea and will be 
spreading it across the country. The potential for cost savings 
from the systematic use of health IT results from removing 
inefficiencies, improving physician decisionmaking, enhancing 
communication, and reducing the need for follow-up care due to 
medical errors, or use of inappropriate services.
    An AHRQ-supported survey found that approximately one third 
of Americans report that they have to go back for a second 
visit because their provider didn't have their medical 
information available at the first visit, waste that could be 
diminished through shared electronic health records.
    Our research has also demonstrated that computerized 
reminders can reduce hospital charges per admission by 
approximately 13 percent. With your support we'll continue our 
efforts to provide sound evidence on the financial benefits of 
health IT.
    Mr. Chairman, I can't overemphasize how essential practical 
technical assistance is to the successful adoption and 
implementation of health IT. We've created the AHRQ National 
Resource Center for Health Information Technology, the largest 
single commitment to technical assistance in AHRQ history. The 
Resource Center leverages our investments in health IT by 
offering help where it is needed in real world clinical 
settings that may be ill-equipped to meet the health IT 
challenge.
    The Resource Center will do this by facilitating expert and 
peer-to-peer collaborative learning, and fostering the growth 
of online communities that are planning, implementing and 
researching technology. One of our grantees has reported to us 
that the provider transition to HIT is one part technical and 
two parts culture, and work process change. Designed initially 
to bring together our grantees, we recently announced that the 
Resource Center's web portal will now be open to all of the 
Nation's community health centers, and we also plan to make it 
available to providers involved in the state-based QIO program, 
to expand the use of health IT in small practice settings.
    Mr. Chairman, I would like to conclude by offering a few 
brief observations, based upon our work in health IT.
    First, health IT alone cannot provide the improvements 
needed in our healthcare system. These improvements will depend 
upon the integration of high quality health IT into a variety 
of settings, individual clinical practices, hospitals and other 
settings.
    Second, for most healthcare settings, health IT is not an 
out-of-the-box solution. Effective use of health IT begins with 
a careful examination of the healthcare setting and then 
deploys the power of health IT to enhance its effectiveness and 
efficiency. It's important to remember that health IT 
applications need to serve clinicians and patients, not the 
other way around. AHRQ's initiative is helping ensure that 
user-friendly health IT will achieve its full promise in the 
clinical setting.
    Third, the financial exposure for providers, when added to 
concerns about doing it right, increases the overall risk of 
investing in health IT. In order to accelerate the pace of 
health IT adoption and implementation, we must ensure that best 
practices, and new knowledge and experience are disseminated 
widely in order to maximize the potential for quality 
improvement as well as reduce economic risk.
    We look forward to continuing to work with Secretary 
Levitt, Dr. Brailer and our other partners to make healthcare 
better for all Americans through health IT.
    Thanks for the opportunity to share my thoughts and I would 
be delighted to answer any questions.
    [The prepared statement of Dr. Clancy follows:]

  Prepared Statement of Carolyn M. Clancy, M.D., Director, Agency for 
    Healthcare Research and Quality, Department of Health and Human 
                                Services

    Chairman Ensign and Members of the Subcommittee, I am delighted to 
join Dr. Brailer in outlining the ways in which the Department of 
Health and Human Services (HHS) is advancing the adoption, 
implementation, and effective use of health information technology 
(IT).
    Achieving the President's goal of widespread use of interoperable 
electronic health records requires us to address a number of complex 
and technical issues, many of which are being addressed at the 
Department level. My testimony will focus on how the activities of the 
Agency for Healthcare Research and Quality (AHRQ) complement the 
Department's efforts by harnessing the power of IT to improve the 
effectiveness, efficiency, quality, and safety of health care.
    While we work with the various divisions of HHS to ensure that the 
fundamental IT infrastructure is in place, we are critically examining 
how these IT tools can be used in real-world health care settings to 
make care better. For many health care providers the need to address 
specific local threats to the safety and quality of patient care is 
immediate; an increasing number of practitioners and organizations have 
made or will soon make investments in health IT. To enable them to make 
informed investment decisions, AHRQ's program and research activities 
support evaluation of the impact of selected health IT applications on 
quality, safety and cost. We also have recognized the need for a strong 
emphasis on the needs of providers who care for rural and underserved 
populations. That is why we have made awards to local and regional 
organizations that affect the care received by more than 40 million 
Americans.
    Leaders in health care recognize that improvement requires both 
incentives and the capacity to respond to those incentives. Our focus 
is on building the capacity within healthcare settings--large and 
small, urban and rural (including frontier areas)--for effective use of 
health IT, and disseminating findings rapidly. The benefits of health 
IT need to begin now for as many Americans as possible. The results of 
these investments represent tangible benefits that will be accelerated 
as the private-public collaboration to facilitate a nationwide 
information infrastructure develops.
    We are also addressing a critical stumbling block to the widespread 
adoption of health IT, the human dimension of the use of IT, which 
focuses on the intersection between IT and the health care providers 
who need to use it. Unlike the baseball field in the movie Field of 
Dreams, we have dramatic examples of the building of health IT systems, 
whose designers found physicians and other clinicians neither came nor 
played. Unless we address these issues as well as technical ones, we 
risk falling far short of a safer, higher quality health care system.
The Importance of Health IT
    When we look at the challenges facing our healthcare system in the 
years and decades ahead, there is no job more important than getting 
health IT into place, and getting it right. As the Institute of 
Medicine noted in their second report on patient safety, Americans 
should be able to count on receiving health care that is safe. This 
requires, first, a commitment by all stakeholders to a culture of 
safety, and second, to improved information systems. While 
transformation of our heath care system--with higher quality, patient-
centric and cost-effective care--will not happen simply as a result of 
health IT, it is difficult to think how transformation could possibly 
take place without the capacities it brings. We have a fundamental 
problem of fractured healthcare delivery that results in needless waste 
of resources. Health IT can bind this system together, even as it 
preserves its diversity.
    Think for a moment about what is happening in health care settings 
around the country. Millions of decisions are being made about people's 
lives without the right information in hand:

        --Is chemotherapy the best treatment for a patient with breast 
        cancer, or should she be treated with radiation and 
        chemotherapy?

        --Which of our young athletes should be screened and with what 
        type of diagnostic test for heart abnormalities, as a front-
        page story in The Wall Street Journal asked last week?

        --How does a person with diabetes, high blood pressure, and 
        obesity manage all the different demands of their conditions?

    Patients and consumers struggle with even more basic decisions: 
Which provider to see? When to seek care? Which treatment option is 
best for their needs?
    Many of these decisions are difficult even in the most ideal 
circumstances, when there is sufficient time to assess good, reliable 
information. But as we all know, these decisions frequently must be 
made at times and places where information is not available, and time 
is of the essence. The power of IT can help us to regularly assess 
quality and outcomes while bringing us reliable data that can be 
accessed at the point-of-care.
    For nearly three decades, AHRQ and the National Library of Medicine 
(NLM) at the National Institutes of Health have funded the basic 
science of health IT, developed and tested tools to facilitate its use, 
and supported the work of innovators. Many of the leading systems of 
our Nation were created on the backbone of AHRQ and NLM grants over the 
last three decades. Two prominent examples are Intermountain Healthcare 
in Utah and the Regenstrief system in Indiana, which are now models for 
the effective use of health IT. The task we have now embarked upon is 
to move that knowledge and experience into the health care system more 
broadly and to support targeted research to fill the gaps in our 
knowledge base that are critical to widespread diffusion of health IT. 
Successful implementation of health IT in turn provides the best 
possible platform for delivering scientific evidence to clinicians and 
patients when decisions are made.
AHRQ's Current Health IT Activities
    In FY 2004, AHRQ awarded 108 grants and contracts to find solutions 
for a number of gaps in our knowledge and to advance the use of health 
IT. Reflecting a commitment of $139 million over 5 years, these awards 
were truly nationwide in scope. They spanned 43 states, with over half 
of the projects based in rural and small hospitals and clinics. In 
combination, these community-based health care institutions provide 
health care to more than 40 million Americans.
    Mr. Chairman, in announcing this hearing you asked how health IT 
can further three objectives: reducing medical errors, improving the 
quality of patient care, and reducing the cost of health care. AHRQ's 
research activities are making significant advances in meeting all 
three of these objectives.
Reducing Medical Errors
    Medication errors are a grave threat to patient safety and present 
one of the greatest opportunities for reducing medical errors. The 
potential value of health IT here seems intuitively obvious: reducing 
handwriting and other communication errors, electronic cross-checks for 
errors in medication strength, identification of interactions with 
other medications or other adverse events reflecting the patient's 
overall medical condition. Our projects span the spectrum from 
prevention to detection and prompt treatment of medication errors, and 
identify the most effective ways to use health IT to achieve each of 
these goals.
    Our first priority is to prevent medication errors from ever 
occurring. In a series of studies, we are finding that electronic 
prescribing with decision support using personal digital assistants 
(PDAs) reduces illegibility, omissions, and the overall incidence of 
prescribing errors. However, we also discovered some of the barriers to 
PDA adoption, including the interface and its interoperability with 
existing systems. We have developed tools to assist practices in 
assessing their readiness and designing their workflow to accommodate 
the use of tools like PDAs.
    Patients, especially patients with chronic illnesses, can play an 
important role in preventing medication errors. Some of our projects 
are developing Internet-based portals to enable patients to manage 
their own care, including medications. In the course of deploying this 
technology, we are learning valuable lessons about how patients want to 
participate. Patients are very enthusiastic about documenting their 
medications, giving their clinicians new insights about medication 
compliance, as well as other supplements the patients may be taking on 
their own initiative. An unexpected side benefit from the move to an 
Internet-based system was that the children of elderly patients who are 
living in a different state were able to assist in their parents' care 
in a new and engaged manner, when parents authorized access by their 
children.
    Recognizing that medication errors can still occur even when health 
care providers are vigilant, a team at Duke University is attempting to 
minimize the potential for serious patient harm. They are testing a 
monitoring system for hospital patients that will detect the onset of 
an adverse drug effect, immediately alert the hospital staff, and 
suggest the most appropriate intervention. AHRQ is also funding systems 
for the voluntary reporting of errors.
    In short, health IT is a critical element in our efforts to improve 
patient safety but it is not the complete answer. The Administration 
continues to support passage of patient safety legislation, which will 
provide the confidentiality and privilege protections that will enable 
health care providers to foster a climate of continuous quality and 
safety improvement.
Improving the Quality of Care
    The linkage between health IT and improving the quality of care 
occurs on multiple levels. We know that we cannot improve the quality 
of care unless we can measure performance. But monitoring and reporting 
the quality of care is time-consuming, inaccurate and incomplete 
without IT systems. A challenge shared by AHRQ and the Centers for 
Medicare and Medicaid Services (CMS) is how to best translate measures 
of quality into computable, automated quality reporting systems in 
settings such as hospitals and physician offices.
    The maturation of IT for use in daily practice comes at a time of 
increasing recognition that good healthcare delivery requires better 
coordination across all sites of care. Many patients obtain care from 
multiple providers and experience the effects of poor coordination of 
information and care. Indeed, 69 percent of Americans report that poor 
coordination among their providers is a serious problem for them, and 
32 percent report that they or a family member have created their own 
medical record to assure that all health care professionals they see 
have accurate, current information about their health issues. Health IT 
can reduce this burden by facilitating the transfer of information 
among providers, customizing knowledge for the patient, and 
facilitating communication between providers. AHRQ has funded cutting 
edge research into how to translate medical knowledge into specific 
information, tailored to the patient at hand and immediately available 
to the clinician when decisions are being made. These include alerts 
about inappropriate therapies, reminders about preventive care, and 
assistance in automatically doing the right thing. Health IT has the 
potential to rapidly disseminate knowledge previously available only in 
large, urban, academic health centers. For example, our project in 
rural Tennessee brings cutting edge cancer care to the rural population 
through decision support systems and telecommunication with cancer 
experts.
    At least two manufacturers have now incorporated a decision support 
system developed by one of our grantees into EKG machines. By helping 
emergency medical service teams and emergency room physicians better 
determine when a patient with chest pains actually has suffered from, 
and may still be vulnerable to a heart attack, quality of care will be 
greatly enhanced. Those who truly need care will receive it and those 
who may be suffering from less serious problems, like indigestion, will 
be spared the unnecessary risks, worries, and costs that accompany 
unnecessary hospitalizations. As this improved diagnostic capability is 
deployed throughout the Nation, annual savings are estimated at $720 
million.
    Improving quality is also about improving communication among care 
providers through IT systems that allow clinicians to quickly access 
patient information, including remote information such as radiology or 
laboratory studies performed off-site. It is about improving the 
complicated coordination required when patients transfer from one care 
setting to another. We have several projects supporting the transition 
of patients, such as pregnant women or post-surgical adults, from the 
intensive hospital setting into an outpatient clinic. And improving 
quality is about supporting the communication between the provider, the 
patient, and the patients' caregivers through electronic mediums such 
as e-mail.
    Our research also has made clear the importance of system issues 
such as organizational culture and workflow. Our investments evaluate 
specific strategies to close the gap between the potential of health IT 
to improve care quality and the less promising reality experienced by 
many providers due to sub-optimal product design or challenges in 
integrating health IT with the work of clinicians. For example, we are 
funding studies of technology integration, using time-motion studies, 
culture surveys, and observational techniques to understand why 
technologies are accepted or sabotaged by the clinical users. But we 
don't stop there. AHRQ funds research projects to explore how the 
technology can adapt in intelligent ways to clinician needs. We have a 
suite of projects with Partners HealthCare System in Boston to develop 
``SmartForms'' for various settings--smart because they anticipate the 
physicians' needs for information based on the patient, and 
automatically assist the physician in pulling together the various 
action plans necessary to execute the right care plan.
    Finally, the breadth of our current portfolio has been instrumental 
in enabling AHRQ to take health IT into settings where traditionally 
there has been underinvestment. These include nursing homes and 
pharmacies, waiting rooms, schools and homes, in rural and small 
settings. These projects have benefited parents and caregivers, 
including the blind, chronically ill and those recovering from serious 
acute events. Each of these new frontiers requires the discovery of the 
unique needs of the targeted population, growing new partnerships, and, 
creatively transferring knowledge about lessons learned.
Reducing the Cost of Care
    The potential for cost savings from systematic use of health IT 
includes avoidable expenditures in the administrative and financial 
aspects of health care institutions, improved efficiencies in workflow, 
improved physician decisionmaking (especially when decision support 
systems provide immediate access to information on comparative 
effectiveness and cost effectiveness), and in the reduced need for 
additional patient care that medical errors often entail. There are 
also significant financial and non-financial costs to patients that can 
be reduced through the introduction of health IT: the potential for 
bringing health care to the patient's location (which can be a serious 
issue for those geographically isolated, homebound, or in nursing 
homes), removing the inconvenience, expense and increased risk of harm 
associated with inpatient admission, reducing or eliminating the need 
to return to a tertiary care hospital for follow-up consultations, and 
the potential for patients to substitute e-mail or other web-based 
consultations in place of office visits with their physicians. One-
third of Americans reported that they needed to return for a repeat 
visit because their clinical information was not available during their 
first visit.
    AHRQ's prior investments provide evidence of the potential for 
savings in selected care settings and our work in progress will 
demonstrate the value obtained from investments in health IT in a broad 
array of settings. Over the last decade work by one of our grantees 
demonstrated that computerized reminders can reduce the cost of tests 
ordered for hospitalized patients by approximately 10 percent. Another 
example is the Utah Health Information Network, developed a decade ago 
by then-Governor Leavitt, which demonstrated the potential for savings 
in administrative and billing costs through the use of health IT. By 
creating a more efficient way to submit bills, UHIN both reduced costs 
and reduced the administrative burden of re-entering the same data for 
different payers. AHRQ now is working with UHIN to add clinical data to 
their statewide system to enhance its potential to improve the quality 
and safety of patient care as well.
    AHRQ is funding another statewide regional health information 
exchange in Indiana, for which the Regenstrief Institute, a national 
health IT leader, is a key player. This statewide initiative builds 
upon the successful NLM-funded Indianapolis patient care network, which 
was developed to make health care information reliably available for 
patients seen in Emergency Departments regardless of where they usually 
get care and to improve the exchange of information between health care 
providers and the public health authorities. When current data are 
available, redundant testing can be avoided and the right care can be 
delivered more rapidly. In an effort to more definitively identify the 
cost savings of health IT, we are concurrently funding an evaluation of 
the value of that exchange, not only in the hospital system but also 
throughout the Indiana primary care and specialty clinics. This well-
designed evaluation will provide the Nation with clear evidence of 
whether the actual savings are as significant as many hope. It will 
provide crucial evidence for those seeking to make a business case for 
health IT.
    AHRQ will also understand the costs and benefits of the statewide 
electronic prescribing roll-out in Massachusetts, undertaken by a 
consortium that includes Blue Cross Blue Shield. AHRQ researchers will 
have access to claims and utilization data for over 1,000 prescribers, 
translating to approximately 480,000 prescriptions over the course of 
the year.
    The results of AHRQ's current research will also inform America 
about the wide-ranging effects of the large investments in health IT by 
integrated delivery systems. One evaluation project studies the effects 
on patient outcomes and resource utilization resulting from Kaiser 
Permanente's $3 billion investment in electronic medical records for 
ambulatory physician practices. The evaluation findings from these 
major investments will be available to the public. This may accelerate 
adoption by enabling health care institutions to learn from the early 
adopters.
National Resource Center for Health IT
    Mr. Chairman, I cannot over-emphasize how essential technical 
assistance is to the successful adoption and implementation of health 
IT. To assure that as many Americans as possible benefit from our 
research, we are committed to exporting lessons learned from current 
demonstrations rapidly and widely. We have been inundated with requests 
for help from providers and health care systems attempting to adopt 
health IT. In response, we have created a National Resource Center for 
Health IT, the largest single commitment to technical assistance in 
AHRQ's history. The Resource Center leverages our investments in health 
IT by offering help where it's needed--real world clinical settings 
that may feel ill-equipped to meet the implementation challenge--
facilitating expert and peer-to-peer collaborative learning and 
fostering the growth of online communities who are planning, 
implementing, and researching health IT. Our initial needs assessment 
led to the development of a series of educational teleconferences on 
critical topics for health IT implementers: how to comply with rules 
and regulations, how to design workflow, how to evaluate effectiveness, 
and how to tackle clinical decision support systems. Early this month, 
we convened a highly successful, week-long meeting attended by over 700 
doctors, nurses, pharmacists, and IT professionals to share practical 
knowledge about health IT, and linked it closely with the Department's 
goals for patient safety. As one of our grantees from Kentucky said, 
``this meeting brought real life case study experience to so many of 
the issues facing us today.''
    AHRQ has also used the Resource Center to assist states that are 
initiating statewide clinical data sharing. We have convened small, 
round-table working meetings of experts to share detailed expertise 
with states that are starting the process of determining the governance 
and technical architecture of their data-sharing organizations. The 
first of these was in Tampa, at the invitation of the Florida 
Governor's Health Information Infrastructure Advisory Board on 
Healthcare; we have planned expert roundtables in New York, Wyoming, 
and Montana, with further assistance to Delaware, Maryland, and 
Georgia. In these roundtables, AHRQ has been fortunate to draw upon the 
expertise of our state contractors who are intimately involved with 
this work in their own states, as well as consultants from our Resource 
Center.
    The Resource Center provides a web portal with critical 
infrastructure for convening practitioners, encouraging collaboration, 
and disseminating best practices. The portal gathers communities of 
practice with similar interests and concerns to share and learn. While 
it was initially only open to AHRQs grantees, we are opening this rich 
resource to other Federal grantees. We recently announced that AHRQ 
will support a special portal for the Nation's community health centers 
as they struggle to adopt health IT, with plans to expand to providers 
involved in the Medicare initiative to expand the use of health IT in 
physician offices known as DOQ-IT and to providers in the Indian Health 
Service (IHS). In recognition of the widespread interest in rapid 
turnaround of health IT knowledge, the Resource Center will be 
expanding its practical, educational teleconferences to any 
organization, and providing in-depth ``learning collaborative'' 
curricula for a smaller subset of interested organizations.
Working in Partnership
    To advance health IT, AHRQ is working closely with public and 
private organizations, such as the National Governors Association 
(NGA), eHealth Initiative, Markle Foundation, Connecting for Health, 
and America's Health Insurance Plans to promote solution development 
for many of the challenges I have described. With the NGA, we will be 
participating in developing and providing leadership resources for 
State officials on investing in health IT and healthcare quality 
improvement.
    Health IT can accelerate improvements in safety and quality if 
there are clear objectives. Working closely with leading medical 
professional organizations (including the American Medical Association, 
American Academy of Family Physicians, and American College of 
Physicians), America's Health Insurance Plans, payers, consumers and 
other stakeholders, AHRQ's leadership has been essential for 
prioritizing goals for improving physician performance in ambulatory 
care. The results of this collaboration, known as the Ambulatory care 
Quality Alliance (AQA) will be adopted broadly in early 2006 in the 
private sector as well as by CMS. The AQA is now developing strategies 
to collect and report the requisite data including the use of health IT 
when feasible. Improvements in care will start now and can be 
accelerated by efforts to establish a nationwide information 
infrastructure led by Secretary Leavitt.
    AHRQ is working with the Leapfrog Group, an organization of leading 
employers to develop an evaluation tool that allows hospitals and 
physicians to ensure that their computerized physician order entry 
(CPOE) systems and electronic prescribing are effectively reducing 
medical errors. These tools will be available by the end of the year. 
AHRQ is also providing support to the Medical Group Management 
Association (MGMA) Center for Research to understand the level of 
adoption of electronic health records and other new technologies in 
medical groups and the issues associated with their successful 
implementation. By documenting barriers encountered in adopting these 
technologies and mechanisms, we will know better how to target our 
research to overcome these barriers.
    AHRQ is collaborating with other Federal agencies to align our 
health IT efforts. With CMS, we are active participants in the design 
and evaluation of health IT projects in pay-for-performance, electronic 
prescribing, and the implementation of the Medicare Modernization Act. 
With the IHS, we have supported enhancements to their electronic health 
record, and, incidentally, that system has been chosen by the National 
Aeronautical and Space Administration (NASA) to be its electronic 
health record. With the Food and Drug Administration and NLM, we are 
supporting standards development and coordination efforts. In all of 
our efforts, AHRQ maintains close relationships with other agencies, in 
order to maximize the Federal investment of health IT dollars. We 
maintain these relationships, in part, through working with the Federal 
Health Architecture (FHA)/Consolidated Health Informatics (CHI) 
Initiative managed by the Office of the National Coordinator for Health 
Information Technology. The FHA has been tasked to provide an 
architecture, or framework, to guide Federal health IT investments, and 
to foster interoperability through the selection and adoption of health 
data standards.
    The Agency is working directly with the Office of the National 
Coordinator for Health Information Technology on a number of issues 
including an analysis of the intersection health IT forms with various 
state privacy laws and business practices. This FY 2005 $11.5 million 
initiative, working with up to 40 states or territories, will assess 
variations in business policies and state laws that affect health 
information exchange and identify practical solutions while assuring 
the preservation of privacy and security. These important efforts will 
assure patients, providers and other stakeholders that personal and 
sensitive health data will remain safe and secure.
Concluding Observations
    Mr. Chairman, I would like to conclude by offering a few brief 
observations based upon our work in health IT.
    First, health IT alone cannot provide the improvements needed in 
our healthcare system. These improvements will depend upon the 
integration of high quality health IT into the very fabric of care by 
incorporating systems into our individual clinical practices, hospitals 
and other settings.
    Second, for most health care settings, health IT is not likely to 
afford an ``out-of-the-box'' solution. Effective use of health IT 
begins with a careful examination of the health care setting and then 
uses the power of IT to enhance its effectiveness and efficiency.
    Third, to accelerate the pace of health IT adoption and 
implementation, we need to facilitate the sharing of both knowledge and 
experience through additional opportunities for voluntary peer-to-peer 
learning. Given the level of economic investment that is required, 
providers are understandably worried that a mistake in judgment could 
prove financially catastrophic.
    Finally, the development of an interoperable health IT 
infrastructure will be a critical element in our Nation's effort to 
accelerate the pace of innovation and the speed with which patients 
will benefit from new medical breakthroughs. The inherent delays in our 
current system for assessing the effectiveness of new drugs, devices, 
and procedures will decrease dramatically with widespread use of health 
IT and advance our common goal of evidence-based medicine.
    Mr. Chairman, this concludes my prepared statement. I will be 
delighted to answer any questions.

    The Chairman. Thank you, Dr. Clancy. Dr. Brailer.

     STATEMENT OF DAVID J. BRAILER, M.D., Ph.D., NATIONAL 
        COORDINATOR FOR HEALTH INFORMATION TECHNOLOGY, 
            DEPARTMENT OF HEALTH AND HUMAN SERVICES

    Dr. Brailer. Thank you Chairman Ensign, and members of the 
Committee, I am pleased to be here with my colleagues today to 
talk about health information technology. And let me start with 
the Executive Order of April 2004 that established my office 
and the activities that the Administration has under way today. 
The goals that we had for that Executive Order have already 
been outlined. But again, they are to lower costs, reduce 
medical errors, improve quality, and reduce the hassle that 
consumers face when they come to healthcare. We seek to have 
widespread adoption of interoperable electronic health records 
within 10 years. The goal of the interoperability, simply put, 
is to have information that follows patients where they want it 
to, and not follow them where they don't.
    Over the course of the past year we've been working to set 
the foundations for this work, and there are three that I would 
like to highlight.
    The first is a Clinical Foundation, and this raises the 
question that many of us are very aware of today: What are the 
benefits that health information technology brings? You've 
already heard cited today that the Institute of Medicine 
reports on deaths that result from inpatient medical errors, 
from ambulatory medical errors, and from related other 
accidents and incidents. We also know from the literature that 
missing information when a physician sees a patient can be 
harmful. Thirty-two percent of Americans report that they 
create and carry some form of a personal health record, because 
they don't want to come to an emergency room and not have their 
information available, or see a specialist and not have them 
know what has happened to that patient in the past. You've 
heard citations of the potential savings that come from the use 
of health information technology ranging from 7.5 percent of 
expenditures, to 30 percent, depending upon the level of 
concomitant industry transformation. We've seen studies that 
have demonstrated that use of electronic health records and 
appropriate order entry can reduce adverse drug events by 70 to 
80 percent. That's an astounding reduction.
    We know that health information technology can save lives, 
improve care, and reduce costs. Now, in addition to this 
Clinical Foundation, we've been working to understand the 
business or industry foundation, in a Technical Foundation. We 
recently released a report from the CEOs of Fortune 100 
companies that we convened to help us understand the Business 
Foundation. The CEOs are not only the leaders of larger 
purchasers, but they're also leaders of industries that had 
been through an information transformation. IT has changed the 
structure and the efficiency of their industry, retailing, 
financial services, manufacturing, banking, transportation and 
shipping. These CEOs reported to us two major findings. First, 
they believe that healthcare could derive the same kinds of 
benefits that their industries have, in terms of sustainable 
productivity from widespread use of point-of-service 
information technologies and second, that, as purchasers, they 
believe this is an urgent priority. They called on the Federal 
Government to act as a leader and a catalyst and a convener to 
take a market-based approach and to bring this forward on a 
basis that can engage the private sector on an active basis. 
The Technical Foundation was also recently released which was 
the summary of the RFI that we asked the industry to respond 
to. These were numerous questions about technology, about 
policy, about the use of technology, and the changes that are 
needed to create positive opportunities in healthcare. We had 
more than 500 responses, totalling more than 5,000 pages of 
responses. We had a 100-employee Federal Task Force to review 
these, and that report was released 3 weeks ago. This 
discussion lead to a number of key findings. These findings 
include the critical role of standards, and not just to have 
standards communicated but to have them detailed to a level of 
specificity, and a level of clarity that allowed our software 
developers, our hospitals and physicians to be able to have 
absolute clarity about what these standards mean and how they 
can be used. They need to have an architecture; they need to 
have an capacity to share and move information. The standards 
create a framework by which information can flow and advances 
in privacy and security that allow us to have both flexibility 
and the ability of information to be portable.
    Building on these three foundations, we saw two critical 
challenges that have become the focus of the Administration's 
policy. The first is how do we create portability of health 
information. Second is, how do we close the electronic health 
record adoption gap.
    Speaking to the latter we know there's a gap between the 
adoption rates of large and small health systems. Very large 
health systems, some of which you will hear from today, have 
been adopting electronic health records over the past 2 years, 
and have accelerated in the past year. Many, many small 
doctors, small hospitals, and rural providers have not been 
able to do so. This has resulted in an overall low adoption 
rate in the industry. We believe we have an opportunity now, 
because of the low adoption rate, to create the foundation for 
interoperability so that, as we move forward, we're able to 
have portability, and to build this into the infrastructure 
that will be put in place over the next few years. Toward this 
end we've begun a number of public/private initiatives that 
have been going forth from RFPs we have out now. There are four 
that I'll briefly highlight.
    One is for standard harmonization, this is to allow the 
standards development organizations and others that are in 
place today to come together to give us a single set, a 
national fabric of standards, that is unambiguous, clear, non-
duplicative, and complete.
    Second is compliance certification, which allows for a 
process to be developed to base inspection of electronic health 
records and other products to ensure that they meet minimal 
standards for safety, for security, and for protection. We know 
that not all electronic health records are created equal and 
until we get this in place we're not able to ensure that the 
software that is used by physicians on patients will deliver 
the kinds of quality, and safety, and privacy results that we 
want to have.
    The third is to develop architectures, solutions for 
information sharing that can be designed in the public interest 
to allow not only capacity for information to move, but also 
motivating commercial investment in the health information 
technology and interoperability industry.
    Fourth is to advance security and privacy, particularly to 
identify mechanisms that can preserve the flexibility that is 
built into Federal and many state laws, and at the same time, 
allow seamless portability of information, so information can 
follow patients wherever they go.
    We've allocated $85 million in this fiscal year to these 
goals and have requested $125 million to achieve these goals in 
2006.
    I appreciate the leadership of this committee and look 
forward to the work that will come in the future. Thank you.
    [The prepared statement of Dr. Brailer follows:]

     Prepared Statement of David J. Brailer, M.D., Ph.D., National 
Coordinator for Health Information Technology, Department of Health and 
                             Human Services

    Chairman Ensign, and members of the Subcommittee, I am Dr. David 
Brailer, the National Coordinator for Health Information Technology. 
The Office of the National Coordinator for Health Information 
Technology is a component of the Department of Health and Human 
Services (HHS). I, along with my colleague Dr. Carolyn Clancy, will 
provide a brief overview of some of the Department's health information 
activities underway.
Setting the Context
    On April 27, 2004, the President signed Executive Order 13335 (EO) 
announcing his commitment to the promotion of health information 
technology (IT) to lower costs, reduce medical errors, improve quality 
of care, and provide better information for patients and physicians. In 
particular, the President called for widespread adoption of electronic 
health records (EHRs) within 10 years so that health information will 
follow patients throughout their care in a seamless and secure manner. 
Toward that vision, the EO directed the Secretary of the Department 
Health and Human Services (HHS) to establish within the Office of the 
Secretary the position of National Coordinator for Health Information 
Technology (National Coordinator), with responsibilities for 
coordinating Federal health information technology (health IT) programs 
with those of relevant Executive Branch agencies, as well as 
coordinating with the private sector on their health IT efforts. On May 
6, 2004, Secretary Tommy G. Thompson appointed me to serve in this 
position.
    On July 21, 2004, during the Department's Health IT Summit, we 
published the ``Strategic Framework: The Decade of Health Information 
Technology: Delivering Consumer-centric and Information-rich Health 
Care,'' (The Framework). The Framework outlined an approach toward 
nationwide implementation of interoperable EHRs and in it we identified 
four major goals. These goals are: (1) inform clinical practice by 
accelerating the use of EHRs, (2) interconnect clinicians so that they 
can exchange health information using advanced and secure electronic 
communication, (3) personalize care with consumer-based health records 
and better information for consumers, and (4) improve public health 
through advanced bio-surveillance methods and streamlined collection of 
data for quality measurement and research. The Framework has allowed 
many industry segments, sectors, interest groups, and individuals to 
review how health IT could transform their activity or experience, 
consider how to take advantage of this change, and to participate in 
ongoing dialogue about forthcoming efforts. My office has obtained 
significant additional input concerning how these four goals can best 
be met.

   We have consulted with, and actively partnered with, 
        numerous Federal agencies in the U.S. Government including the 
        Departments of Veterans Affairs, Defense, Commerce, and 
        Homeland Security.

   We have met with many organizations and individuals 
        representing stakeholders of the healthcare system to obtain 
        their individual views.

   We have reached out to states and regions through site 
        visits and town hall meetings to understand the health IT 
        challenges experienced at the local level as well as best 
        practices for the use of, and collaboration regarding, health 
        IT.

   We have regularly testified before, and been informed by, 
        the National Committee on Vital and Health Statistics (NCVHS) 
        on issues critical to the Nation's health IT goals.

   We have monitored, and coordinated with, the efforts of the 
        Commission for Systemic Interoperability. (The Medicare 
        Modernization Act called for the Secretary to establish the 
        Commission to develop a comprehensive strategy for the adoption 
        and implementation of health care information technology 
        standards that includes a timeline and prioritization for such 
        adoption and implementation.) and

   We have met with delegations involved with health IT from 
        other countries, including Canada, the Netherlands, Japan, 
        Australia, Great Britain, and France to learn from their 
        individual country experiences.

    Building on the EO, The Framework, and this input, we have 
developed the clinical, business, and technical foundations for the HHS 
health IT strategy. Let me turn to some of those now.
The Clinical Foundation: Evidence of the Benefits of Health IT
    We believe that health IT can save lives, improve care, and reduce 
costs in our health system. Five years ago, the Institute of Medicine 
(IOM) estimated that as many as 44,000 to 98,000 deaths occur each year 
as the result of medical errors. Health IT, through applications such 
as computerized physician order entry can help reduce medical errors 
and improve quality. For example, studies have shown that adverse drug 
events have been reduced by as much as 70 to 80 percent by targeted 
programs, with a significant portion of the improvement stemming from 
the use of health IT.
    Every primary care physician knows what a recent study in the 
Journal of the American Medical Association (JAMA) showed: that 
clinical information is frequently missing at the point-of-care, and 
that this missing information can be harmful to patients. That study 
also showed that clinical information was less likely to be missing in 
practices that had full electronic records systems. Patients know this 
too and are taking matters into their own hands. A recent survey by the 
Agency for Health Care Research and Quality (AHRQ) with the Kaiser 
Family Foundation and the Harvard School of Public Health found that 
nearly 1 in 3 people say that they or a family member have created 
their own set of medical records to ensure that their health care 
providers have all of their medical information.
    There are mixed signals about the potential of health IT to reduce 
costs. Some researchers estimate that savings from the implementation 
of health IT and corresponding changes in care processes could range 
anywhere from 7.5 percent of health care costs (Johnston et al., 2003; 
Pan et al, 2004) to 30 percent (Wennberg et al., 2002; Wennberg et al., 
2004; Fisher et al., 2003; Fisher et al., 2003). These estimates are 
based in part on the reduction of obvious errors. For example, a 
medical error is estimated to cost, in 2003 dollars, about $3,700 
(Bates et al, 1997). If poorly designed or implemented, health IT will 
not bring these benefits, and in some cases may even result in new 
medical errors and potential costs.
    Therefore, achieving cost savings requires a much more substantial 
transformation of care delivery that goes beyond simple error 
reduction. But, health IT must be combined with real process change in 
order to see meaningful improvements in our delivery system. It 
requires the industry to follow the best diagnostic and treatment 
practices everywhere in the Nation.
    So, this is the clinical foundation for our work, which 
demonstrates that health IT can save lives, improve care, and improve 
efficiency in our health system; now let me turn to the business 
foundation.
The Business Foundation: The Health IT Leadership Panel Report
    Recognizing that the healthcare sector lags behind most other 
industries in its use of IT, an HHS contractor convened a Health IT 
Leadership Panel for the purposes of understanding how IT has 
transformed other industries and how, based upon their experiences, it 
can transform the health care industry.
    The Leadership Panel was comprised of nine CEOs from leading 
companies that purchase large quantities of healthcare services for 
their employees and dependents and that do not operate in the 
healthcare business. The Leadership Panel included CEOs from FedEx 
Corporation, General Motors, International Paper, Johnson Controls, 
Target Corporation, Pepsico, Procter & Gamble, Wells Fargo, and Wal-
Mart Stores. The business leaders were called upon to evaluate the need 
for investment in health information technology and the major roles for 
both the government and the private sector in achieving widespread 
adoption and implementation. Based upon their own experiences using IT 
to reengineer their individual business--and by extension, their 
industries--the Leadership Panel concluded that investment in 
interoperable health IT is urgent and vital to the broader U.S. economy 
due to rising health care demands and business interests.
    As identified by the Lewin Group, the Leadership Panel unanimously 
agreed that the Federal Government must begin to drive change before 
the private sector would become fully engaged. Specifically, the 
Leadership Panel concluded:

   Potential benefits of health IT far outweigh manageable 
        costs.

   Health IT needs a clear, broadly motivating vision and 
        practical adoption strategy.

   The Federal Government should provide leadership, and 
        industry will engage and follow.

   Lessons of adoption and success of IT in other industries 
        should inform and enhance adoption of health IT.

   Among its multiple stakeholders, the consumer--including 
        individual beneficiaries, patients, family members, and the 
        public at large--is key to adoption of health IT and realizing 
        its benefits.

   Stakeholder incentives must be aligned to foster health IT 
        adoption.

    The Leadership Panel identified as a key imperative that the 
Federal Government should act as leader, catalyst, and convener of the 
Nation's health information technology effort. The Leadership Panel 
also emphasized that Federal leverage as purchaser and provider would 
be needed--and welcomed by the private sector. Private sector 
purchasers and health care organizations can and should collaborate 
alongside the Federal Government to drive adoption of health IT. In 
addition, the Leadership Panel members recognized that widespread 
health IT adoption may not succeed without buy-in from the public as 
health care consumer. Panelists suggested that the national health IT 
vision must be communicated clearly and directly to enlist consumer 
support for the widespread adoption of health IT.
    These findings and recommendations from the Leadership Panel were 
published in a report released in May 2005 and laid the business 
foundation for the HHS health IT strategy. Now, let me turn to the 
technical foundation.
The Technical Foundation: Public Input Solicited on Nationwide Network
    HHS published a Request for Information (RFI) in November 2004, 
that solicited public input about whether and how a Nationwide Health 
Information Network (NHIN) could be developed. This RFI asked key 
questions to guide our understanding around the organization and 
business framework, legal and regulatory issues, management and 
operational considerations, standards and policies for 
interoperability, and other considerations.
    We received over 500 responses to the RFI, which were reviewed by a 
government-wide RFI Review Task Force. This Task Force was comprised of 
over 100 Federal employees from 17 agencies, including the Departments 
of Homeland Security, Defense, Veterans Affairs, Treasury, Commerce, 
Health and Human Services, as well as multiple agencies within the 
departments. The resulting public summary document has begun to inform 
policy discussions inside and outside the government.
    We know that the RFI stimulated substantial and unprecedented 
discussions within and across organizations about how interoperability 
can really work, and we have continued to build on this. These 
responses have yielded one of the richest and most descriptive 
collections of thoughts on interoperability and health information 
exchange that has likely ever been assembled in the U.S. As such, it 
has set the foundation for actionable steps designed to meet the 
President's goal.
    While the RFI report is an illustrative summary of the RFI 
responses and does not attempt to evaluate or discuss the relative 
merits of any one individual response over another, it does provide 
some key findings. Among the many opinions expressed by those 
supporting the development of a NHIN, the following concepts emerged:

   A NHIN should be a decentralized architecture built using 
        the Internet, linked by uniform communications and a software 
        framework of open standards and policies.

   A NHIN should reflect the interests of all stakeholders and 
        be a joint public/private effort.

   A governance entity composed of public and private 
        stakeholders should oversee the determination of standards and 
        policies.

   A NHIN should provide sufficient safeguards to protect the 
        privacy of personal health information.

   Incentives may be needed to accelerate the deployment and 
        adoption of a NHIN.

   Existing technologies, Federal leadership, prototype 
        localized or regional exchange efforts, and certification of 
        EHRs will be the critical enablers of a NHIN.

   Key challenges to developing and adopting a NHIN were listed 
        as: the need for additional and better refined standards; 
        addressing privacy concerns; paying for the development and 
        operation of, and access to the NHIN; accurately verifying 
        patients' identity; and addressing discordant inter- and intra-
        state laws regarding health information exchange.

Key Actions
    Building on these steps, two critical challenges to realizing the 
President's vision for health IT are being addressed: (a) 
interoperability and the secure portability of health information, and 
(b) electronic health record (EHR) adoption. Interoperability and 
portability of health information using information technology are 
essential to achieve the industry transformation goals sought by the 
President. Further, the gap in EHR adoption between large hospitals and 
small hospitals, between large and small physician practices, and 
between other healthcare providers must be addressed. This adoption gap 
has the potential to shift the market in favor of large players who can 
afford these technologies, and can create differential health 
treatments and quality, resulting in a quality gap.
    To address these challenges, HHS is focusing on several key 
actions: harmonizing health information standards; certifying health IT 
products to assure consistency with standards; addressing variations in 
privacy and security policies that can hinder interoperability; and, 
developing an architecture for nationwide sharing of electronic health 
information. HHS has allocated $86.5 million to achieve these and other 
goals in FY 2005 and has requested $125 million in FY 2006.

Standards Harmonization
    We have issued a Request For Proposal (RFP) to develop, prototype 
and evaluate a process to harmonize industry-wide standards 
development, and also unify and streamline maintenance of and 
refinements to existing standards over time. Today, the standards-
setting process is fragmented and lacks coordination, resulting in 
overlapping standards and gaps in standards that need to be filled. 
Additionally, within the Federal Government, National Institute of 
Standards and Technology (NIST) will develop a process to take output 
from the standards harmonization process and consider them as Federal 
Information Processing Standards (FIPS) relevant to Federal agencies.
    We envision a process where standards are identified and developed 
around real scenarios--i.e., around use cases or breakthroughs. A ``use 
case'' is a technology term to describe how actors interact in specific 
value-added scenarios--for example, rapidly assembling complete patient 
information in an emergency room; we also call them ``breakthroughs.''

Compliance Certification
    We have issued an RFP to develop, prototype and evaluate a process 
to specify criteria for the functional requirements for health IT 
products--beginning with ambulatory EHRs, then inpatient EHRs, and then 
the infrastructure components through which EHRs interoperate (e.g., 
NHIN architecture). This RFP will also evaluate a process for 
inspection based on conformance with these criteria. NIST will 
collaborate with the RPF contractor in this effort, where appropriate, 
as directed by HHS.

NHIN Architecture
    We have issued an RFP to develop models and prototypes for a NHIN 
for widespread health information exchange that can be used to test 
specialized network functions, security protections and monitoring, and 
demonstrate feasibility of scalable models across market settings. The 
NHIN architecture will be coordinated with the work of the Federal 
Health Architecture and other interrelated RFPs. The goal is to develop 
real solutions for nationwide health information exchange and 
ultimately develop a market--particularly the supply side--for health 
information exchange, which does not exist today. This RFP will fund 6 
architectures and operational prototypes that will maximize the use of 
existing resources such as the Internet, and will be tested 
simultaneously in three markets with a diversity of providers in each 
market. HHS intends to make these prototype architectures available in 
the public domain to prevent control of ideas and design. Through the 
RFP process, we encourage the development of a complete open source 
solution.

Security and Privacy
    We issued an RFP, which Dr. Clancy will discuss further, to assess 
variations in state laws and organization-level business policies 
around privacy and security practices, including variations in 
implementations of HIPAA privacy and security requirements that may 
pose challenges to automated health information exchange. Variations in 
organizational level policies and state laws may create barriers to 
interoperability. This RFP, administered by AHRQ, will seek to define 
workable mechanisms and policies to address these variations, while 
maintaining the levels of security and privacy that consumers expect.
    We expect to award contracts for these RFPs by October 2005.

Fraud and Abuse Study
    HHS has a 6-month project underway to determine how automated 
coding software and a nationwide interoperable health information 
technology infrastructure can address healthcare fraud issues. The 
project is being conducted through a contract with the Foundation of 
Research and Education (FORE) of the American Health Information 
Management Association (AHIMA)
    While only a small percentage of the estimated 4 billion healthcare 
claims submitted each year are fraudulent, the total dollars in 
fraudulent or improper claims is substantial. The National Health Care 
Anti-Fraud Association (NHCAA) estimates that healthcare fraud accounts 
for 3 percent of U.S. health expenditures each year, or an estimated 
$56.7 billion. They cite other estimates, which may include improper 
but not fraudulent claims, as high as 10 percent of U.S. health 
expenditures or $170 billion annually.
    At present, the contractor is working to perform two main tasks. 
One task is a descriptive study of the issues and the steps in the 
development and use of automated coding software that enhance 
healthcare anti-fraud activities. The second task is identifying best 
practices to enhance the capabilities of a nationwide interoperable 
health information technology infrastructure to assist in prevention, 
detection and prosecution, as appropriate, in cases of healthcare fraud 
or improper claims and billing. An expert cross-industry committee 
composed of senior level executives from both the private and public 
sectors is guiding this second task.
    The project's final report is scheduled for completion in September 
2005.

Conclusion
    Thank you for the opportunity to present this summary of the 
activities of the Office of the National Coordinator for Health 
Information Technology. A year ago, the President created this position 
by Executive Order. In that time, we have established the clinical, 
business and technical foundations for the HHS health IT strategy. Now, 
we have begun to execute key actions that will give us real, tangible 
progress toward that goal.
    HHS, under Secretary Michael Leavitt's leadership, is giving the 
highest priority to fulfilling the President's commitment to promote 
widespread adoption of interoperable electronic health records--and, it 
is a privilege to be a part of this transformation.
    Mr. Chairman, this concludes my prepared statement. I would be 
delighted to answer any questions that you or the Members of the 
Subcommittee may have.

    Senator Ensign. Thank you, Dr. Brailer. Dr. Semerjian.

             STATEMENT OF DR. HRATCH G. SEMERJIAN,

        ACTING DIRECTOR, NATIONAL INSTITUTE OF STANDARDS

           AND TECHNOLOGY, TECHNOLOGY ADMINISTRATION,

                     DEPARTMENT OF COMMERCE

    Dr. Semerjian. Thank you, Mr. Chairman. Chairman Ensign, 
Senator Kerry, and Senator Allen, I would like to thank you for 
the opportunity to add to this discussion regarding health 
information technology. I certainly was very pleased to hear 
some of the discussion earlier, discussion on standards and 
interoperability. And, in fact, NIST has a long and productive 
history of engaging industry sectors and overcoming 
interoperability and data exchange barriers to improve 
competitiveness and reduce costs.
    Inadequate interoperability problems have been found to 
cost the automotive industry, for example, some $5 billion a 
year. The semi-conductor industry $4 billion, and construction 
industry more than $15 billion. And, we have been working with 
industry and standards organizations to address these issues. 
With the increasing use of information technology in healthcare 
delivery, issues associated with health-related information 
sharing, security, privacy, and interoperability issues need to 
be addressed. NIST has been working with the healthcare 
community to improve the reliability and reduce the costs of 
U.S. healthcare since the 1960s. We've developed, for example, 
standards that are used by the College of American Pathologists 
as their benchmark for purposes of testing for more than 15,000 
U.S. clinical laboratories. Manufacturers are, for example, 
turning to NIST for accurate measurements, for emerging medical 
treatments and clinical diagnostics, in areas such as coronary 
stents, and radioactive seeds for heart attack and cancer 
patients. In the mid to late 1990s, as part of our Advance 
Technology Program on information infrastructure for 
healthcare, NIST and our U.S. industry partners invested over 
$300 million in health information technology to aid the U.S. 
healthcare enterprise in developing an infrastructure to 
improve coordination and enable administrative efficiencies, 
avoid medical errors, reduce cost, and open new technological 
opportunities.
    NIST has worked with the healthcare industry to establish 
concensus-based standards and to develop tests, prototypes and 
diagnostic tools for building robust interoperable commercial 
solutions. In fact, early on, NIST built a prototype that's 
called a remote procedure, a call broker for the Veteran's 
Health Administration (VHA), my colleague here, to enable 
communication among their geographically disparate hospital 
system. More recent efforts in support of VHA included 
prototyping, emerging technology solutions such as the use of 
Smart Cards by veterans, and single sign-on capabilities for 
doctors.
    Building on this initial interest in health enterprise 
integration, NIST is collaborating on integrating the 
healthcare enterprise project sponsored by the Radiological 
Society of North America, Healthcare Information and Management 
System Society, and the American College of Cardiology.
    As part of this approach, NIST has been instrumental in 
developing the Cross-Enterprise Document Sharing standard. This 
standard provides a mechanism to securely access a patient's 
multifaceted clinical information, especially when they're 
remotely located and controlled.
    In addition, NIST works within Health Level 7, in defining 
standard functionality and conformance criteria for electronic 
health record systems, forming the basis for their 
certification. Similarly within the medical device community 
NIST is applying the expertise in automatic test generation to 
develop tests and associated tools for devices within intensive 
care units. In accordance with the National Technology Transfer 
and Advancement Act of 1995, NOMB Circular A119, NIST supports 
the development of voluntary industry standards as the 
preferred source of standards, to be used by the Federal 
Government.
    In addition, if there are specific Federal Government 
requirements that cannot be fulfilled by voluntary standards, 
NIST develops Federal Information Processing Standards, FIPS, 
to meet these needs. This extensive record of promoting 
standards and the technical expertise on NIST's staff will be 
extremely useful in meeting the President's goal of making our 
country's premier healthcare system safer by reducing medical 
errors, improving the quality of care, making it more 
affordable by reducing the cost of care and making healthcare 
more accessible, by making health-related information available 
at the point of care.
    As a football coach, who we loved and cherished would have 
said, the future is now for healthcare, health IT. At NIST 
we're committed to supporting the Department of Health and 
Human Services, in the implementation of the President's health 
IT initiative.
    We're looking forward to working with Dr. Brailer's office 
and other organizations to help harmonize health information 
standards, to certify health IT products, to ensure conformance 
with these standards and assisting in the development of a 
nationwide architecture for sharing electronic health 
information. In doing so NIST's widely recognized technical 
expertise in cybersecurity and privacy will be applied to 
secure the nationwide health information network.
    Once again thank you for inviting me to testify about NIST 
activities, and I'll be happy to answer any questions you may 
have.
    [The prepared statement of Dr. Semerjian follows:]

    Prepared Statement of Dr. Hratch G. Semerjian, Acting Director, 
      National Institute of Standards and Technology, Technology 
                            Administration, 
                         Department of Commerce
Introduction
    Chairman Ensign and Members of the Committee, I am Hratch 
Semerjian, Acting Director of the National Institute of Standards and 
Technology (NIST), part of the Technology Administration of the 
Department of Commerce. I am pleased to be offered the opportunity to 
add to this discussion regarding health information technology.
    I will focus my testimony on the role that timely and reliable 
measurement and consensus-based standards can play in increasing the 
accuracy, privacy, security, and reliability of health information to 
meet the President's mandate to make our country's premier healthcare 
system safer, more affordable, and more accessible through the 
utilization of information technology (IT). A cultural transformation 
of our Nation's $1.9 trillion \1\ national healthcare system can 
reverse troubling statistics such as 44,000-98,000 Americans dying each 
year from inpatient medical errors; \2\ Americans are being injured or 
are dying each year from adverse drug events; \3\ and a significant 
annual expenditure on treatments that may not improve health, may be 
redundant, or may be inappropriate.
---------------------------------------------------------------------------
    \1\ National Healthcare Expenditures Projections: 2004-2014. Office 
of the Actuary. Centers for Medicare and Medicaid Services.
    \2\ Institute of Medicine.
    \3\ ADE.
---------------------------------------------------------------------------
    As a result of the President's initiative, the Nation will have a 
healthcare revolution that will connect IT systems for payment, 
prescriptions, and patient care. In order for this model to succeed, it 
will require interoperable IT standards and clinical diagnostic tools 
that are technically sound, robustly specified, and traceable to 
national standards and reference materials.
    These standards and measurements go directly to the heart of NIST's 
core metrology mission. Several years ago, NIST recognized the growing 
importance of critical measurements and standards needed to advance the 
healthcare industry, and improve the quality and cost-effectiveness of 
health care delivery systems. Accordingly, NIST established a cross-
disciplinary effort to address these needs. While a good portion of 
NIST healthcare portfolio makes a priority of providing the healthcare 
community with standards and diagnostic tools, our involvement is 
actually much broader. NIST has a long and effective history in working 
with health-related organizations to improve our Nation's healthcare 
system.
    In Fiscal Year 2005, NIST health-related projects encompassed many 
areas of the healthcare sector, including screening and prevention, 
diagnostics, treatments, dentistry, quality assurance, bio-imaging, 
systems biology, and clinical informatics. Recognizing the importance 
of this area and NIST's crucial responsibilities, President Bush has 
requested an additional $7.2 million for this area for Fiscal Year 
2006. In all aspects of this Strategic Focus Area in healthcare-related 
activities, NIST recognizes the importance of directly addressing the 
needs of the doctors, clinics, and patients.
    NIST's experience in managing the Baldrige National Quality 
Program, which promotes performance excellence among U.S. 
manufacturers, service companies, educational institutions, and health 
care providers, is another way in which NIST stays connected with 
health-related organizations. A large number of healthcare providers 
now are using or beginning to learn more about the Baldrige Quality 
Program as a framework for performance excellence within their 
organizations. The ways in which organizations manage and protect 
critical, electronic healthcare information and use IT systems to 
improve their performance is a major aspect of the Baldrige Health Care 
Criteria. Dealing with this sector and its senior leaders closely has 
provided NIST special insight into how these organizations operate and 
their special needs.
    NIST is committed to supporting the Department of Health and Human 
Services (HHS) in the implementation of the President's Health IT 
initiative. Commerce Secretary Gutierrez and NIST stand ready to be 
helpful in ensuring the success of the President's initiative. 
Secretary Leavitt is aware of NIST's capabilities and we look forward 
to his guidance as to how we can best utilize our resources to assist 
the initiative.
    As you know the President has set a goal of widespread adoption of 
electronic health records within 10 years so that health information 
will follow patients throughout their care in a seamless and secure 
manner. To achieve this goal, NIST and the Department of Health and 
Human Services have developed a strategic partnership that leverages 
each Department's core expertise and resources to facilitate science 
and technology innovation to improve human health and the U.S. economy. 
This agreement to work together on the key actions that will enable us 
to achieve the President's goal, which the HHS witnesses will discuss 
in more detail, builds upon already-existing and successful 
collaborations between NIST and HHS in cancer research and treatment, 
standards for medical devices, and a host of other areas.
    To assist HHS in the first phase of NHIN development, NIST will:

   Assist in evaluating responses to the Request For Proposals 
        (RFP) recently issued by HHS;

   Provide technical expertise for Nationwide Health 
        Information Network (NHIN) architecture;

   Assist in Standards Harmonization;

   Develop Performance and Conformance Metrics for NHIN;

   Assist in the development of procedures for certifying 
        conformance; and

   Provide guidance for Security.

    Specifically, HHS is soliciting proposals for a series of 
government contracts that will help advance health IT adoption. To 
support this effort in the near term, NIST has been asked to 
participate in the review and evaluation of responses to the Request 
For Proposals and will work in a technical advisory capacity to the 
contractors selected, as requested by the HHS National Coordinator for 
Health IT. To support the long-term vision of a NHIN where clinicians, 
laboratories, pharmacies, and patients have secure access to key 
medical information, NIST will continue its research with standards and 
emerging technologies, and provide testbeds for technology evaluation 
and standards harmonization for the NHIN.
    NIST is uniquely situated to contribute significantly to the 
advancement of this plan. NIST draws upon the expertise that exists in 
many of its programs. NIST's scientific measurement laboratories 
respond to the measurement, standards and technology needs of U.S. 
industry, government, and academia. NIST's industrial programs seek to 
further U.S. technology development, as well as help ensure the growth 
of U.S. small manufacturers, and have developed rigorous review and 
evaluation procedures for responses to open solicitations.
    As the lead Federal agency for measurements and standards, NIST has 
a long and successful history of collaborating with industry sectors to 
respond to their needs, and is poised to be successful in a strong 
collaboration with both industry and government partners in the 
development of widespread interoperability of healthcare applications. 
It bears repeating that in all aspects our healthcare-related 
activities, NIST recognizes the importance of directly addressing the 
needs of the doctors, clinics, and patients
    In the remainder of my testimony, I will provide details on NIST's 
track record in evaluating technical proposals and in IT standards 
harmonization, certification, accreditation, and measurement science to 
support the rigorous testing that is required for the development of 
the NHIN. The real value of a health IT system will only be achieved if 
such systems are interoperable and electronic connectivity is achieved, 
so that clinicians have key information, related to past patient 
experiences, laboratory results, and prescriptions, when and where it 
is needed--at the point of care. The development of such a health IT 
system will depend upon interoperability standards and clinical 
diagnostic tools that are technically sound, robustly specified, and 
traceable to national standards and reference materials. It is critical 
that all systems be secure and reliable. Sometimes, it is literally a 
matter of life and death.
    Based on many decades of expertise in information technology, 
clinical measurements and decision support, NIST will contribute to 
both the short-term and long-term goals of establishing a National 
Health Information Network.

NIST Experience in Evaluating Responses to RFPs
    NIST has valuable experience reviewing requests for proposals in 
several of its programs, including the Advanced Technology Program's 
Information Infrastructure for Healthcare. NIST evaluates each 
submission against specific criteria, locating appropriate reviewers 
for technology areas represented, formulating Source Evaluation Boards 
as decisionmaking bodies, maintaining confidentiality of proprietary 
information, securely moving large number of documents and maintaining 
complete and accurate records, providing each submission full 
consideration and fair treatment, and providing unsuccessful candidates 
in-depth debriefings. A recent National Academy of Sciences report 
applauds NIST for its effectiveness and efficiency in this effort. 
Those capabilities will assist HHS in making very important health 
information technology awards.
    Second, NIST researchers have specific technical and business 
expertise that would add value to the review and evaluation of the 
submissions to the current RFP's. This expertise spans broad areas of 
healthcare informatics and includes, but is not limited to: 
architectures, networks, interoperability, security and privacy, 
electronic health records, automation of clinical notes, expert alert 
systems, decision support systems, telemedicine, virtual reality 
training modules and simulation of minimally invasive surgery.

NIST Technical Expertise for NHIN Architecture
    NIST works with industry, government, and academia to establish 
consensus-based standards, develop associated test metrics to ensure 
that implementations or devices perform according to the defined 
standard, and establish comprehensive certification capabilities for 
the IT industry. NIST has for many years been focused on developing 
metrics for the information technology industry. We develop tests and 
diagnostic tools for building robust, interoperable, commercial 
solutions. Applying such tools early in the life cycle process helps 
industry determine whether its products conform to the standard, and 
ultimately, will interoperate with other products. In addition, the 
development and use of these metrology tools fosters thorough review of 
the standard, which will, in turn, aid in resolving errors and 
ambiguities. The integration of information technology into the health 
industry has the potential to reduce medical costs by as much as 20 
percent, a significant savings in an annual healthcare bill that was 
14.9 percent of the GDP $1.6 trillion--in 2002,\4\ estimated to be $1.9 
trillion in 2005 \5\ and projected to rise to $3.6 trillion by 2014.\6\
---------------------------------------------------------------------------
    \4\ National Center for Health Statistics. Health, United States, 
2004. With Chartbook on Trends in the Health of Americans. Hyattsville, 
Maryland: 2004. Table 116. Page 326. Available at: http://www.cdc.gov/
nchs/data/hus/hus04trend.pdf#116.
    \5\ National Healthcare Expenditures Projections: 2004-2014. Office 
of the Actuary. Centers for Medicare and Medicaid Services. Available 
at: http://www.cms.hhs.gov/statistics/nhe/projections-2004/
proj2004.pdf.
    \6\ Ibid.
---------------------------------------------------------------------------
(a) Standards Harmonization
    As the U.S. National Measurement Institute, NIST is frequently 
looked to for research and measurements that provide the technical 
underpinning for standards, ranging from materials test methods to 
standards for building performance, and for a range of technologies, 
from information and communications technologies to nano- and bio-
technologies. As a matter of policy, NIST encourages and supports 
participation of researchers in standards developing activities related 
to the mission of the Institute. More than a quarter of NIST's 
technical staff--363 employees--participate in standards developing 
activities of 90 organizations. These include U.S. private sector 
standardization bodies, industry consortia, and international 
organizations. The NIST staff hold 1,183 committee memberships, and 
chair 142 standards committees.
    In the information technology area, 40 NIST researchers have taken 
leadership roles and served with distinction in 80 national and 
international standards committees promoting the interests of many 
essential U.S. industries. Participation varies across a number of core 
information technology disciplines, including advancing and securing 
Internet and wireless networks, data exchange, data imaging, security 
and privacy, biometrics, and usability and accessibility of IT systems. 
In the area of telemedicine, NIST has worked in conjunction with the 
American Telemedicine Association to define standards and guidelines 
that enable the development and advancement of telemedicine. ATA and 
NIST have conducted a series of workshops to identify standards needed 
to provide ocular care through telecommunications technology.
    In the health IT arena, the NIST staff participates in the 
following key IT standards-related efforts:

   ANSI Healthcare Informatics Standards Board (HISB).

   ASTM International--Operating Room of the Future.

   Markle Foundation's Connecting for Health.

   American Telemedicine Association (ATA).

   Federal Health Architecture/Consolidated Health Informatics 
        (FHA/CHI).

   Medical Device Communications, Wireless Networks (IEEE).

   Healthcare Information and Management Systems Society/
        Integrating the Healthcare Enterprise (HIMSS/IHE).

   Health Level 7 (HL7).

    In accordance with the National Technology Transfer and Advancement 
Act of 1995 (Pub. L. 104-113) and Administration policies, NIST 
supports the development of voluntary industry standards both 
nationally and internationally as the preferred source of standards to 
be used by the Federal Government. NIST collaborates with national and 
international standards committees, users, industry groups, consortia, 
and research and trade organizations, to get needed standards 
developed.
    NIST will work with HHS to develop a strategy to promote such 
voluntary consensus standards, or Federal Information Processing 
Standards for use in the Federal sector.
    As part of this process toward standardization of Federal health 
information, NIST will begin to formalize the first set of data 
standards agreed upon in the Federal Health Architecture/Consolidated 
Health Informatics Initiative, through the development of appropriate 
Federal Information Processing Standards and guidance to Federal 
agencies through NIST Special Publications. This will help the Federal 
Government to achieve a greater level of interoperability of Federal 
health data.
(b) Performance and Conformance Metrics for the NHIN
    NIST works with industry to establish credible, cost-effective 
metrics to demonstrate software interoperability and conformance to 
particular standards. These metrics often form the basis or criteria 
upon which certifications are based. Typical NIST metrics include 
models, simulations, reference implementations, test suites, and 
testbeds.
    Specific activities in support of health information technology 
include:

        HIMSS/IHE: A key problem today in the realization of electronic 
        health records for the patient's continuity of care is the 
        inability to share patient records across disparate 
        enterprises. To address this problem, NIST is collaborating 
        with industry to develop standardized approaches to sharing 
        electronic clinical documents across healthcare organizations 
        and providers. NIST staff have built reference implementations 
        and developed validation tools to demonstrate the feasibility 
        and correctness of implementations, and worked with 
        implementers to create integrated solutions based on these 
        approaches. In particular, NIST is collaborating with the 
        ``Integrating the Healthcare Enterprise'' (IHE) project 
        sponsored by the Radiological Society of North America, 
        Healthcare Information and Management Systems Society (HIMSS) 
        and the American College of Cardiology. The goal is to develop 
        an approach called: Cross-Enterprise Document Sharing (XDS). 
        This standards-based approach provides a mechanism to access a 
        patient's multi-faceted clinical information, regardless of 
        where it is physically located, while maintaining local control 
        and ownership of that information and without compromising the 
        privacy and security of the patient's clinical history.

        HL7: Health Level 7 is a standards development organization 
        that provides standards for the exchange, management and 
        integration of data that support clinical patient care and the 
        management, delivery and evaluation of healthcare services. 
        NIST is collaborating with HL7 in defining standard 
        functionality and conformance criteria for EHR systems. These 
        criteria form the basis for EHR certification efforts and will 
        help ensure that HL7 messaging and EHR systems' conformance can 
        be defined and measured at an appropriate level. NIST is also 
        developing a conformance-testing tool that automatically 
        generates test messages for HL7 Version 2 message 
        specifications.

        IEEE Medical Device Information: In a typical intensive care 
        unit (ICU), a patient may be connected to one or more vital-
        sign monitors and receive medicine or other fluids through 
        multiple infusion pumps. More acutely-ill patients may also be 
        supported by devices such as ventilators, defibrillators or 
        hemodialysis machines. Each of these medical devices has the 
        ability to capture volumes of data, available multiple times 
        per second. NIST is collaborating with the IEEE Medical Device 
        Communications working group in developing conformance tests 
        and associated tools to provide the medical device industry 
        with the necessary tools to ensure that critical devices 
        properly implement the medical device standards.

        Operating Room of the Future: It is estimated that 10-20 
        percent of hospital errors occur in the perioperative 
        environment (before, during, and after surgery). Technology can 
        play a major role in increasing the overall patient safety in 
        such situations through the development of the operating room 
        of the future (ORF). The ORF will consist of a network of 
        interoperable plug and play medical devices, where the 
        utilization of advanced technologies, such as robot-assisted 
        surgery, sensor fusion, virtual reality, workflow integration, 
        and surgical informatics, will result in a higher quality of 
        healthcare by considerably increasing patient safety. NIST is 
        working with the Center for the Integration of Medicine and 
        Information Technology (CIMIT) in the development of an 
        architectural framework for medical device integration, 
        development of clinical requirements for device plug-and-play 
        standards, identification of current interfaces, and 
        development, testing and simulation of interfaces.

        Clinical Informatics: Building on past experience in 
        information modeling and research to support interchange 
        standards for the manufacturing industry, NIST is preparing a 
        comprehensive report of all clinical information-oriented 
        standards, their development organizations, their scope and the 
        vocabularies/ontologies they employ. NIST will use the report 
        as the basis for developing a plan for applying NIST's 
        experience to assist in clinical information-oriented standards 
        development and closer harmonization.

        Improved Internet Protocols: The Internet Engineering Task 
        Force (IETF) is a large, open international community of 
        network designers, operators, vendors, and researchers 
        concerned with the evolution of the Internet architecture and 
        the smooth operation of the Internet. NIST is actively 
        participating in IETF efforts in the areas of: IP security, key 
        management, Internet Protocol version 6, integrated services 
        and resource reservation, IP switching, advanced routing and 
        mobile ad hoc networks. NIST leads the IETF effort to develop 
        and deploy a secure Internet naming and routing infrastructure. 
        NIST metrics are used within this premier organization to 
        expedite the development and deployment of standardized 
        Internet infrastructure protection technologies. A secure 
        infrastructure is an absolute first step in developing a 
        National Health Information Network that can assure the 
        confidentiality of electronic patient records.

        WPAN's for Health Information: NIST is assisting industry in 
        the development of an universal and interoperable wireless 
        interface for medical equipment, expediting the development of 
        standards for wireless technologies, and promoting their use in 
        the healthcare environment. In close collaboration with the 
        Institute of Electrical and Electronics Engineers (IEEE) and 
        the U.S. Food and Drug Administration, NIST developed 
        theoretical and simulation models for two candidate Wireless 
        Personal Area Network (WPAN) technologies including the 
        Bluetooth and the IEEE 802.15.4 specifications. NIST evaluated 
        their performance for several realistic healthcare scenarios 
        and contributed our results to the appropriate IEEE working 
        group. NIST contributions will constitute the basis of standard 
        requirements on the use of wireless communications for medical 
        devices.

(c) Certification
    NIST has an established history of developing procedures for 
certifying conformance to consensus-based standards. Conformity 
assessment activities form a vital link between standards, which define 
necessary characteristics or requirements for software products, and 
the performance of the products themselves. Conformity assessment 
procedures provide a means of ensuring that the products, services, or 
systems produced or operated have the required characteristics, and 
that these characteristics are consistent from product to product, 
service to service, or system to system. Conformity assessment 
includes: sampling and testing; inspection; certification; management 
system assessment and registration; accreditation of the competence of 
those activities and recognition of an accreditation program's 
capability. NIST has been in the certification business since its 
inception in 2001, and is well positioned to provide technical guidance 
in the development of a technical certification regimen, including 
specific certification metrics, software to perform comprehensive 
certification tests, and certification procedures.
(d) Security
    For many years, NIST has made great contributions to help secure 
our Nation's sensitive information and information systems. Our work 
has paralleled the evolution of IT systems, initially focused 
principally on mainframe computers, now encompassing today's wide gamut 
of information technology devices. Our important responsibilities were 
re-affirmed by Congress with passage of the Federal Information 
Security Management Act (FISMA) of 2002 and the Cyber Security Research 
and Development Act of 2002.
    Beyond our role to serve the Federal Agencies under FISMA, our FIP 
standards and guidelines are often voluntarily used by U.S. industry, 
global industry, and foreign governments as sources of information and 
direction for securing information systems. Our research also 
contributes to securing the Nation's critical infrastructure systems. 
Moreover, NIST has an active role in both national and international 
standards organizations in promoting the interests of security and U.S. 
industry. Current areas that are applicable to the NHIN include:

   Security Management and Guidance;
   Cryptographic Standards and Applications;
   Security Testing; and
   Security Research/Emerging Technologies.

    Recent activities specifically related to health IT include:

        Guidance for Understanding the HIPAA Security Rule: The 
        Security Rule issued under the Health Insurance Portability and 
        Accountability Act of 1996 (HIPAA) directs certain health care 
        entities, known as ``covered entities,'' to comply with 
        standards for keeping certain health information that is in 
        secure electronic form. NIST has published a document, An 
        Introductory Resource Guide for Implementing the HIPAA Security 
        Rule that summarizes and clarifies the HIPAA Security Rule 
        requirements for Federal agencies that are covered entities. It 
        also directs readers to other NIST publications that can be 
        useful in implementing the Security Rule.

        Healthcare Accreditation Guidance: NIST in conjunction with 
        URAC (not an acronym) and the Workgroup of Electronic Data 
        Interchange (WEDI) sponsors the NIST/URAC/WEDI Health Care 
        Security Workgroup. The group promotes the implementation of a 
        uniform approach to security practices and assessments by 
        developing white papers, crosswalks (of regulations and 
        standards), and educational programs. The group brings together 
        stakeholders from the public and private sectors to facilitate 
        communication and consensus on best practices for information 
        security in healthcare. Ultimately, these best practices will 
        be integrated into accreditation criteria used by hospitals and 
        other healthcare facilities. The group draws heavily upon 
        information technology security standards and guidelines 
        developed by NIST.

Clinical Decision Support
    In addition to our contributions to building a NHIN, NIST is 
developing measurements and technologies that can be used in providing 
advanced clinical decision support. Doctors rely on diagnostic tests to 
optimize patient care. Many of these tests owe their high accuracy to a 
variety of NIST standards, measurements, and calibrations. These 
measurements are essential for patient care and the most efficient use 
of available health care funds. NIST is contributing to increased 
efficiency in health care delivery by ensuring that the measurement 
quality assurance tools--reference measurement methods, certified 
reference materials and calibrations--are available and well integrated 
in the NHIN. Some examples of NIST work include:

   In Vitro Diagnostic Medical Device Measurements;
   Standard Reference Materials for Clinical Diagnostic 
        Markers;
   Joint Committee on Traceability in Laboratory Medicine;
   Gene Expression Analysis;
   Point-of-Care Testing; and
   Analytical Information Exchange.

Conclusion
    As the Committee can see by the few examples I have cited, NIST has 
a very diverse portfolio of activities supporting our Nation's health 
information technology effort. With its long experience as well as a 
diverse array of expertise, NIST is able to assist the Department of 
Health and Human Services in achieving the President's goal and respond 
meeting both the short-term and long-term needs of the Nationwide 
Health Information Network.
    Once again thank you for inviting me to testify about NIST's 
activities, and I would be happy to answer any questions you may have.

    Senator Ensign. Thank you.
    Dr. Kolodner.

  STATEMENT OF ROBERT M. KOLODNER, M.D., ACTING CHIEF HEALTH 
             INFORMATICS OFFICER, VETERANS HEALTH 
         ADMINISTRATION, DEPARTMENT OF VETERANS AFFAIRS

    Dr. Kolodner. Thank you Mr. Chairman. Good morning, Mr. 
Chairman and Members of the Subcommittee. Thank you for 
inviting VA here today to discuss our work in the field of 
health information technology. Dr. Jonathan Perlin, VA's Under 
Secretary for Health, regrets that he is unable to be with you 
today, and has asked me to talk with you on his behalf about 
VA's successes in the area of health IT. VA's electronic health 
record system, known as VistA, is recognized as one of the most 
comprehensive and sophisticated electronic health records, or 
EHRs, in use today. As a doctor and as a patient, I am 
passionate about the use of this technology and the very real 
effects it can have on patients' lives. It can mean the 
difference between life and death.
    In addition to describing, and then actually showing, VistA 
I want to reinforce two areas that I think are pivotal to the 
successful widespread adoption of electronic health records, 
and have been mentioned here today; and those are 
interoperability and data standardization. In VA today, 
virtually all clinical documents created by VA providers are 
stored in VistA. To give you an idea of the magnitude of data 
now available; there are over 650 million progress notes, 
discharge summaries, and other clinical documents, more than 
1.3 billion orders, and 300 million images in VistA as of March 
2005.
    An estimated 40 percent of veterans treated by VA each year 
also receive care from non-VA health providers. Just imagine 
the benefit to veterans when VA is able to exchange electronic 
health data with their other doctors in real time, 
appropriately and securely, so that their complete health 
information is available regardless of where the veterans seek 
care. Interoperability of health information systems is 
crucial, and we need to make sure that we share not only data 
but meaning, which brings us to data standardization.
    We're working with our public- and private-sector health 
partners on a variety of standards-related activities, as 
mentioned previously, and these also include key collaborations 
with FDA and the National Library of Medicine on drug 
information standards. Our standardization efforts have already 
improved our ability to share information with other agencies. 
For example, we can now share selected health information back 
and forth with DoD in real-time. And by this fall, we will be 
performing immediate drug-allergy and drug-drug checks on all 
outpatient medications a veteran receives from either VA or 
DoD. Use of health data standards is crucial.
    Before I demonstrate our current VistA system, I just want 
to briefly mention our next-generation health information 
system, HealtheVet-VistA, which will build on our successful 
VistA system. Like VistA, this software will be in the public 
domain. This means that providers, other Federal, state, and 
local agencies, and small medical practices, as well as the EHR 
system vendors can leverage our country's investment in VA's 
world-class EHR. HealtheVet-VistA, along with my HealtheVet, 
which is a personal record we provide for use directly by 
veterans, will help us to continue to transform VA's healthcare 
system from being organization-centric to being truly patient-
centric.
    We in VA look forward to sharing our systems, knowledge, 
and expertise with our partners throughout the healthcare 
community to contribute to and support the President's plan for 
transforming healthcare in the U.S. I know that I can't do our 
EHR justice just by talking about it. So I would like to show 
you how it works.
    I have on this laptop the entire VistA system that runs in 
hospitals across the Nation, as well as an imaging system. I've 
opened here the application called ``CPRS.'' That's the 
electronic chart that our providers use whenever they're taking 
care of the patients. When I've signed on, the system gives me 
notifications that are specific to me--notes that I need to 
sign or abnormal results I need to follow up on. The 
information I'm going to share with you is real patient data, 
but it has been scrubbed so there is no patient identity--it's 
protected. And we're going to start by looking at Mr. Madl's 
chart. When I select Mr. Madl, I have a screen that looks like 
a chart that you might have on paper--that is, it has tabs 
across the bottom--so physicians are familiar with the 
structure. And I can open up a cover sheet that has lots of 
information. From the information on this sheet, I can drill 
down and get information directly on diagnosis or medications. 
And where it becomes more useful is when I bring up the 
patient's vital signs--in this case, the blood pressure. I can 
immediately graph years and years of data, and engage the 
patient by actually having the patient look at the screen 
together with me. And I can talk to Mr. Madl about the increase 
in his blood pressure and why we need to get this under 
control. And it's very clear to him that his blood pressure has 
been rising, and I can engage him much more effectively in 
terms of his care.
    Mr. Madl is here today because of something that is 
reflected in his abnormal blood results. I can look quickly at 
what that blood work is. I'm going to bring up his hematocrit, 
his red count, and look at all the results and review his 
record. You can see the normal range at the top here. Mr. Madl 
has been anemic most of his life. But there are a couple of 
episodes where his blood count drops even more dramatically. 
You can notice a rapid drop and a rapid rise, since the body 
can't make the red cell count that is increasing quickly. That 
means he's received a blood transfusion on at least two 
occasions during this episode. So we're looking for where Mr. 
Madl is bleeding. We can do something else that is unique to VA 
and that is open up images. This can include everything that 
can be imaged. It can be records from another hospital; it can 
be papers the patient signs, or in this case we can actually 
look at his colonoscopy and see that he has diverticulosis. 
These are blind alleys in his colon, but more importantly, he 
actually has bleeding while we're doing the colonoscopy. As I 
mentioned, this was a real case. In 1992 before we had our PACS 
systems--our radiology images--this was the film that was 
collected on what's called an angiography study, where dye is 
injected into the arteries. We look for where the blood vessels 
are not sharp and the bleeding is occurring. When we put the X-
ray up against the light box, we were not able to find where 
the bleeding was. One of the physician assistants said, ``Wait 
a minute. We've got this new-fangled imaging system. Can we use 
it? '' So they scanned in the X-ray, and this is the image of 
the scanned piece of film. You say, ``OK it's a scanned piece 
of film. What can you do with it? '' Well, once it's 
electronic, you actually can manipulate it very nicely. You can 
adjust the contrast as I am doing now. If you want to look at 
the boney structures in the spine, you can change the contrast 
to see the bones better. But today we're looking for where the 
bleeding is, so we look out into these areas near the sides. 
We're looking for a fuzzy area. By inverting the image, we can 
see over here where a blood vessel's a little fuzzy. Let me 
zoom in so you can see where the bleeding was. The treatment 
team was able to locate it because of this technology and stop 
the bleeding for this particular veteran.
    Let me just show you one more patient. This is Mr. Green. 
We'll select Mr. Green, and bring up his chart very quickly. 
You notice that the veteran's picture changes. This gentlemen 
may look familiar to you, probably a relationship in the past. 
Mr. Green came to the VA for a different reason.
    We talked about safety, and the importance of saving lives. 
For Mr. Green, we went to prescribe a medication for him--in 
this case, penicillin. I entered all of the necessary dosage 
information to order the penicillin. When I went to accept the 
order, CPRS displays a warning to me, because Mr. Green is 
allergic to penicillin. It has now stopped me from giving him 
medication that he is allergic to.
    Today, Mr. Green is here because of chest pain. If you look 
at his progress notes, we can see one with a little icon. When 
we open up the note, it brings up the associated images. Mr. 
Green had a cardiac catheterization. At any of the PCs 
throughout the hospital, and soon across the country, Mr. 
Green's cardiac angiography can be retrieved and viewed. What's 
important is that the study shows us where the narrowing is, 
and why Mr. Green is having chest pain. We can then do the 
corrective procedure, in this case a balloon angioplasty. You 
can see the balloon in place in this picture. Finally, we can 
see following that procedure that the blood vessels are now 
open, and Mr. Green can go on without the chest pain.
    As a follow-up, in his next clinic visit, we can show these 
images to Mr. Green, explain to him why it is important for him 
to follow his diet, for him to take his medicine, and exercise. 
Again, it is that teachable moment that we have for helping Mr. 
Green to lead a better, safer life.
    Mr. Chairman, that's the end of my remarks. I look forward 
to any questions you might have.
    [The prepared statement of Dr. Kolodner follows:]

  Prepared Statement of Robert M. Kolodner, M.D., Acting Chief Health 
  Informatics Officer, Veterans Health Administration, Department of 
                            Veterans Affairs

    Good Morning, Mr. Chairman and Members of the Subcommittee.
    Thank you for inviting me here today to discuss our work in the 
field of health information technology.
    One year ago, Dr. Jonathan B. Perlin, M.D., Ph.D., MSHA, FACP, 
Under Secretary for Health, Department of Veterans Affairs, appeared 
before the House Committee on Veterans' Affairs, Subcommittee on 
Oversight and Investigations to discuss the importance of electronic 
health records and the role of the Department of Veterans Affairs (VA) 
in the development, use, and sharing of this valuable technology. 
President Bush had just outlined an ambitious plan to ensure that most 
Americans have electronic health records within 10 years. The President 
noted a range of benefits possible with the expanded use of information 
technology, including reduced costs; improved health care quality; 
reduced frequency of medical errors; advancements in the delivery of 
appropriate, evidence-based medical care; greater coordination of care 
among different providers; and increased privacy and security 
protections for personal health information.
    A lot has happened in the field of health information technology in 
the year since the President's call to action announced at the VA 
Maryland Health Care System in April 2004, and discussions about the 
potential of electronic health records have become part of the national 
conversation. I have included, for the record, a brochure that 
highlights President Bush's April visit to the Baltimore VA Medical 
Center.
    Today I'd like to talk about VA's leadership in the field of health 
information technology, and tell you about our next-generation health 
information system, known as HealtheVet. I'd also like to highlight our 
work in three areas that I think are pivotal to the broader, successful 
adoption of electronic health records: data standardization, 
interoperability, and privacy.

A History of Innovation
    With one of the most comprehensive electronic health record (EHR) 
systems in use today, VA is a recognized leader in the development and 
use of EHRs and other information technology tools. VA's work in health 
information technology goes back almost 30 years, when VA created the 
Decentralized Hospital Computer Program (DHCP), one of the first 
automated health information systems ever developed to support multiple 
sites and cover the full range of health care settings. VA has 
continued to lead the health care community in the development of new 
health IT tools, building on the foundation of DHCP to create the VistA 
system in use today--a suite of over 100 applications which support the 
day-to-day clinical, financial, and administrative functions of the 
Veterans Health Administration (VHA). These applications form the 
foundation of VistA--the Veterans Health Information Systems and 
Technology Architecture, the automated health information system used 
throughout VHA.
    Many VistA enhancements were designed to support the transformation 
of the VA health system over the past decade, as VA shifted its 
emphasis from inpatient care to outpatient care, and introduced 
performance measures and performance-based accountability throughout 
its health care system. In the mid-1990s, VHA embarked on an ambitious 
effort to improve the coordination of care by providing integrated 
access to these applications through implementation of an electronic 
health record, known as the Computerized Patient Record System or CPRS. 
CPRS provides a graphical user interface, or GUI, to the information 
captured in VistA.
    With CPRS, providers can access patient information at the point of 
care--across multiple sites and clinical disciplines. CPRS provides a 
single interface through which providers can update a patient's medical 
history, place a variety of orders, and review test results and drug 
prescriptions. The system has been implemented at all VA medical 
centers and at VA outpatient clinics, long-term care facilities, and 
domiciliaries--1,300 sites of care throughout VHA.

The Benefits of Electronic Health Records
    Electronic health records, or EHRs, are appealing for a number of 
reasons, including convenience, availability, and portability. The most 
compelling reason to use information technology in health care is that 
it helps us provide better, safer, more consistent care to all 
patients. The President referred to an oft-cited 1999 report in which 
the Institute of Medicine (IOM) estimated that between 44,000 and 
98,000 Americans die each year due to medical errors. Many more die or 
suffer permanent disabilities because of inappropriate or missed 
treatments in ambulatory care settings. IOM cited the development of an 
electronic health record as essential for reducing these numbers and 
improving the safety of health care. In its 2002 publication, 
Leadership by Example, IOM noted that ``[c]omputerized order entry and 
electronic medical records have been found to result in measurably 
improved health care and better outcomes for patients.''
    How can EHRs improve patient safety and quality of care? First, 
with an EHR, all relevant information is available to clinicians when 
they need it, where they need it--and it's legible. A provider can 
quickly review information from previous visits, have ready access to 
clinical guidelines, and survey research results to find the latest 
treatments and medications. All of this information is available 
wherever patients are seen--in acute settings, clinics, examining 
rooms, nursing stations, and offices.
    Many of us see different doctors for different medical conditions. 
How many of these physicians have access to all of the information that 
has been collected over the course of these visits? In VHA, patient 
records from multiple sites and different providers can be viewed at 
the same time at the point of care. This is simply not possible with 
paper records.
    In addition to making medical records more accessible, EHRs can 
help clinicians better document the reasons a patient sought care and 
the treatment that was provided. Given the time constraints they face, 
many physicians resort to writing brief, sometimes cryptic notes in a 
patient's chart, and then write more complete documentation when they 
have time. EHRs enable clinicians to document care quickly and 
thoroughly, and can provide reminders based on the specific medical 
conditions and test results that have been documented.
    CPRS, for example, allows clinicians to enter progress notes, 
diagnoses, and treatments for each encounter, as well as discharge 
summaries for hospitalizations. Clinicians can easily order lab tests, 
medications, diets, radiology tests, and procedures electronically; 
record a patient's allergies or adverse reactions to medications; or 
request and track consults with other providers.
    Even if we could transfer paper records quickly and reliably from 
one provider to another, and make sure that the information in records 
was complete, many hard-copy patient records simply contain too much 
information for a clinician to sift through effectively. There is 
always the possibility that something crucial could be missed. When 
health information is stored electronically, however, we can make use 
of software tools to analyze that information in real-time. We can 
target relevant information quickly, compare results, and use built-in 
order checks and reminders to support clinical decisionmaking. These 
capabilities promote safer, more complete, more systematic care.
    Consider the benefits we have seen in VHA in the area of medication 
ordering. When orders for medications are handwritten or given 
verbally, errors and mistakes inevitably occur. However, when 
physicians use computerized order-entry systems to enter medication 
orders electronically, errors caused by illegible handwriting or 
misinterpretation of dosages, strengths, or medication names are 
virtually eliminated. CPRS includes automated checks for drug-drug or 
drug-allergy interactions, alerting the prescribing physician when 
potentially dangerous combinations occur. Currently, 94 percent of all 
VHA medication orders are entered by the ordering provider directly 
into VistA using CPRS.
    Information technology can also serve to reduce the number of 
errors that occur when medications are given to a patient. VHA's Bar 
Code Medication Administration system (BCMA) is designed to ensure that 
each patient receives the correct medication, in the correct dose, at 
the correct time. In addition, the system reduces reliance on human 
short-term memory by providing real-time access to medication order 
information at the patient's bedside.
    BCMA provides visual alerts--prior to administration of a 
medication--if the correct conditions are not met. For example, alerts 
signal the nurse when the software detects a wrong patient, wrong time, 
wrong medication, wrong dose, or no active medication order. These 
alerts require the nurse to review and correct the reason for the alert 
before actually administering the drug to the patient. Changes in 
medication orders are communicated instantaneously to the nurse 
administering medications, eliminating the dependence on verbal or 
handwritten communication to convey these order changes. Time delays 
are avoided, and administration accuracy is improved.
    BCMA also provides a system of reports to remind clinical staff 
when medications need to be administered or have been overlooked, or 
when the effectiveness of administered doses should be assessed. The 
system also alerts staff to potential allergies, adverse reactions, and 
special instructions concerning a medication order, and order changes 
that require action.
    The VistA Imaging system is another application which has extended 
the capabilities of VistA and CPRS. VistA Imaging stores medical images 
such as x-rays, pathology slides, scanned documents, cardiology exam 
results, wound photos, and endoscopies directly into the patient record 
as soon as they become available, providing clinicians with additional 
information essential for diagnosis and treatment.
    I have used VA's electronic health record system for years. As a 
doctor--and as a patient--I am very enthusiastic about the benefits of 
this technology. I don't think I can fully do the system justice by 
talking about it. I'd like to show you how it works.
    [Demonstration]

The Importance of Standards
    The richness of VA's EHR is evident, in terms of both clinical 
features and health data. Imagine the benefits of sharing this data--
appropriately and securely--among VA's health delivery partners, so 
that relevant health information would be available regardless of where 
a veteran sought care. As we move toward this goal, we need to make 
sure that we share not only data, but meaning. And to do this, we need 
health data standards.
    Virtually all clinical documents created by VA providers are stored 
in the EHR, and data from commercial medical devices can be transmitted 
automatically directly into a patient's health record. To give you a 
sense of the magnitude of EHR use in VA, let me give you some round 
numbers: As of March 2005, VA's VistA systems contained 658 million 
progress notes, discharge summaries, and other clinical documents; 1.35 
billion orders, and 300 million images. More than 550 thousand new 
clinical documents, 910 thousand orders, and 475 thousand images are 
added each workday - a wealth of information for the clinician.
    And yet, with an electronic health record--as with a paper record--
more information isn't always better if we can't use it. How can we be 
sure we can take full advantage of the voluminous information we 
collect in the EHR? The key is data standardization.
    There's an old joke in the standards field: ``The great thing about 
standards is that there are so many to choose from.'' For nearly every 
kind of clinical data--from diseases, procedures, and immunizations, to 
drugs, lab results, and digital images--there are multiple sets of 
standards to choose from. For example, there are at least 12 separate 
systems for naming medications, and the ingredients, dosages, and 
routes of administration associated with them.
    It is often necessary to use a combination of data standards to 
transmit a single message from one system to another. Even health care 
organizations committed to using standards have a difficult time 
figuring out which standards to use.
    Consolidated Health Informatics (CHI) is an eGov initiative 
involving Federal agencies with responsibility for health-related 
activities. CHI participants evaluate and choose health data and 
communication standards to be incorporated into their future health IT 
systems. VA was instrumental in the formation of CHI, and works closely 
with the Department of Defense (DOD) and the Department of Health and 
Human Services (HHS) to help foster the Federal adoption of the agreed-
upon standards as part of a joint strategy for developing Federal 
interoperability of electronic health information. To date, CHI has 
endorsed 20 communications and data standards in areas such as 
laboratory, radiology, pharmacy, encounters, diagnoses, nursing 
information, and drug information standards developed through a 
collaboration between VA and HHS.
    Within VA, we have established a formal program to coordinate the 
adoption, implementation, and verification of health data standards 
across all sites of care. We also work with external Standards 
Development Organizations (SDOs) to augment and refine available 
standards to ensure that they meet health care delivery needs in VA and 
elsewhere. The work involved in adopting and implementing data 
standards is deliberative and difficult. It requires collaboration 
among clinicians, health information professionals, developers, and 
business process experts. Yet, the use of data standards can have a 
very real effect on a patient's care.
    When VA developed its first EHR, the technological environment in 
VA hospitals--as in other hospitals at the time--was very different 
from the environment today. There was not a computer on every desk. 
There were no graphical user interfaces, only text-based displays on 
``dumb terminals.'' There were no multi-color screens, no Windows, no 
pull-down menus. No one had a mouse. When you wanted to enter data in 
an electronic health record, you didn't point-and-click, you typed.
    For example, when a clinician wanted to document a patient's 
allergy to penicillin, he typed the word ``penicillin'' in the allergy 
section of the patient's electronic health record. To save time, many 
clinicians entered ``PCN'', a common abbreviation for penicillin.
    As part of our data standardization effort, we went back and looked 
at the allergy data that had been collected over the years. We found 
that ``penicillin'' and ``PCN'' had been typed in more than 75,000 
times. We also found thousands of entries in which penicillin had been 
misspelled. Not only is it a waste of time to type the same information 
over and over, it introduces a potential patient-safety issue. Let me 
give you an example.
    Suppose a veteran comes in for a check-up and tells the physician 
that he is allergic to sulfa drugs. The physician enters this 
information in the patient's record under allergies, but because he is 
typing quickly, he inadvertently misspells the word ``sulfa''. Suppose 
that on a subsequent visit, another clinician orders Sulfamethoprim, 
which is a type of sulfa drug. When a clinician orders a medication, 
CPRS checks the patient's record to see if the patient is allergic to 
the medication. Although the system checks for common misspellings, it 
can't predict every possible misspelling of every medication. In this 
case, CPRS might not alert the second physician that he had ordered a 
drug the patient was allergic to, simply because the word ``sulfa'' was 
misspelled when it was entered by the first physician. By eliminating 
misspellings and establishing a standard vocabulary across sites, we 
will ensure that medication order checks work as intended, and that the 
EHR supports patient safety and clinical decisionmaking to the fullest 
extent.

Data Standards and Interoperability
    The use of electronic health records and other information 
technology tools in a single medical office can improve health care 
quality, reduce medical errors, improve efficiency, and reduce costs 
for the patients treated there. However, as the President noted a year 
ago, the full benefits of IT will be realized when we have a 
coordinated, national infrastructure to accelerate the broader adoption 
of health information technology.
    The problems created by a lack of standardized data are magnified 
when interacting with other organizations. Even seemingly 
straightforward information can be misconstrued when it is interpreted 
by different organizations.
    Consider two simple terms: yes and no. In many computer systems, 
the number ``1'' is used to indicate ``yes'', and the number ``2'' is 
used to indicate ``no''. In some systems, it is reversed: ``1'' means 
``no'', and ``2'' means ``yes''. Some systems use ``0'' and ``1'', 
instead of ``1'' and ``2''. In still other systems, ``Y'' is used to 
indicate ``yes'', and ``N'' is used to indicate ``no''. Sometimes 
lowercase ``y'' and ``n'' are used. Sometimes, ``yes'' is actually 
stored as ``y-e-s'', and ``no as ``n-o''. In VA, we found 30 different 
combinations of codes for ``yes'' and ``no'', stored in nearly 4,000 
different data fields. We can standardize our representation of ``yes'' 
and `no'' within VA computer systems, but unless our healthcare 
partners employ the same standards to exchange data with us, we cannot 
be sure that we are conveying the intended meaning of the data we are 
exchanging.
    The Office of the National Coordinator for Health Information 
Technology (ONCHIT) recognizes the importance of data and 
communications standards in developing a comprehensive network of 
interoperable health information systems across the public and private 
sectors. Without data standards, we might be able to exchange health 
information, as we do now when we copy and send paper records, but we 
won't be able to use it as effectively to deliver safer, higher-quality 
care using clinical alerts and reminders. True interoperability between 
providers simply cannot be achieved without data standardization.
    VHA has a long history of participation in standards development 
organizations. As a health care provider and early adopter of health IT 
on a large scale, VHA frequently identifies areas for standards 
development and works with other public- and private-sector 
organizations to develop consensus-based solutions. HHS Secretary Mike 
Leavitt recently announced the formation of the American Health 
Information Community. ONCHIT has released a Request for Proposal 
calling for standards harmonization. This effort will foster a more 
cohesive, integrated approach to standards development, replacing the 
existing fragmented, inefficient approach in which standards are 
developed topic-by-topic. VHA supports these HHS activities and looks 
forward to participating, along with other Federal partners, in these 
activities as they develop.
    Our data standardization efforts at VA have already improved our 
ability to share information with other agencies. I'd like to highlight 
our work with the Department of Defense.
    In April 2002, VA and DOD adopted a joint strategy to develop 
interoperable electronic health records by 2005. This cross-cutting 
initiative, known as the VA/DOD Joint Electronic Health Records 
Interoperability (JEHRI) Plan--HealthePeople (Federal), is based on the 
common adoption of standards, the development of interoperable data 
repositories, and joint or collaborative development of software 
applications to build a replicable model of data exchange technologies. 
The progress made by VA and DOD has served as a catalyst to move the 
health care industry toward the use of interoperable health information 
technologies that have the potential to improve health care delivery, 
increase patient safety, and support the provision of care in times of 
crisis.
    Through collaborative efforts, VA and DOD will be better positioned 
to evaluate health problems among service members, veterans, and shared 
beneficiary patients; to address short- and long-term post-deployment 
health questions; and to document any changes in health status that may 
be relevant for determining disability.

VistA-Office EHR
    As a physician, I have seen first-hand the benefits of electronic 
health records in VA: immediate access to information, elimination of 
duplicate orders, increased patient safety, improved information-
sharing, more advanced tracking and reporting tools, and reduced costs. 
VHA is now working with the Centers for Medicare and Medicaid Services 
(CMS) to make the benefits of electronic health records available to 
providers in rural and underserved areas, as directed by President Bush 
in Executive Order 13335 issued in April 2004. CMS is sponsoring the 
development of VistA-Office EHR, an enhanced version of VA's VistA and 
CPRS designed specifically for use in non-VA clinics and physician 
offices. With the targeted release of VistA-Office EHR in August 2005, 
CMS hopes to stimulate the broader adoption and effective use of 
electronic health records by making a robust, flexible EHR product 
available in the public domain.

The HealtheVet Program
    The spirit of innovation that inspired the development of VistA, 
CPRS, BCMA, and VistA Imaging has led VA to the next step in the 
evolution of health care IT--HealtheVet. HealtheVet-VistA is VA's next-
generation health information system, designed to support more 
personalized care for our veterans, more sophisticated clinical tools 
for our doctors and nurses, and more advanced communication with our 
health care partners. HealtheVet builds on decades of VA expertise in 
health care IT to support the strategic goals of the Department, meet 
interagency obligations, take advantage of new developments in 
technology to address weaknesses in the current system, and most 
importantly, improve the safety and quality of health care for 
veterans.
    VA has been recognized by IOM and the mainstream press as having 
one of the most sophisticated EHR systems in the world. VistA and CPRS 
are in the public domain and have served as models for healthcare 
organizations in the public and the private sectors alike. VistA has 
been adopted for use by the District of Columbia Department of Health, 
and State veterans homes in Oklahoma. A number of other countries have 
either implemented VistA or expressed an interest in acquiring the 
technology. VA's DHCP system was modified for use in DOD and DHCP, and 
VistA is used in modified form by the Indian Health Service. By the 
late-1990s, the three largest Federal systems providing direct health 
care were using derivatives of VA's EHR, although only VA was using the 
current and more robust version including CPRS.
    Under the HealtheVet-VistA program, VA will incrementally enhance 
and supplement the current functional capabilities of VistA and will 
provide increased flexibility, more sophisticated analytical tools, and 
support for seamless data sharing among providers both within and 
outside VA. Like VistA, software developed under the HealtheVet program 
will be available in the public domain. Federal agencies, small medical 
practices, and EHR system vendors will all benefit from the advances 
made through HealtheVet-VistA.
    Given the success of VistA, some people have asked why we are 
changing it. The short answer is ``to benefit the veteran.''
    VA health IT systems have been forged and tested in the real world 
of health care. I can think of no other successful organization, with a 
history of innovation and a world-class system, that would simply rest 
on its laurels.
    One reason there is so much interest in VistA is that it has never 
been a static system. The health care environment of today is not the 
health care environment of 10 years ago. Nor is the VistA system today 
the VistA system of 10 years ago--or even of 1 year ago. VA has 
continued to refine and enhance VistA since its introduction to reflect 
advances in clinical practice, the availability of new commercial 
products, the changing VA health care model, new Congressional mandates 
(such as those related to current combat engagements), and new Federal 
laws (such as the Health Insurance Portability and Accountability Act 
and cybersecurity requirements).
    We have to make these types of changes all the time--that's the 
nature of health care. The current VistA system has served us well 
through decades of transformation in health care. But VA has outgrown 
its facility-centric architecture, and the system has simply become too 
expensive to maintain. HealtheVet-VistA will give us a more flexible 
architecture so that we can support integrated ambulatory care and 
home-base health care, maintain continuity of operations in the event 
of a disaster, and improve response time by increasing system capacity 
and communications speed.
    HealtheVet-VistA will also allow us to strengthen privacy and 
security protections through use of features such as role-based access. 
We will be able to limit access to information based on the user's 
identity, location, job function, or legal authority, for example. We 
will strengthen our ability to track exactly who looks at the 
information, at what time, and for how long.
    An estimated 40 percent of veterans we treat at VA each year also 
receive care from non-VA physicians. VA is working with DOD, ONCHIT, 
and other partner organizations to develop a longitudinal health record 
that will incorporate information from DOD, VA, and private-sector 
health providers from whom the veteran has sought care. Throughout 
these collaborative projects, safeguards have been implemented to 
ensure that the privacy of individuals is protected in accordance with 
the various confidentiality statutes and regulations governing health 
records, including the Privacy Act, the HIPAA Privacy Rule, and several 
agency-specific authorities. As we work toward greater data exchange 
and true interoperability with our health care partners, privacy and 
security of medical information will be a top priority.

Personal Health Records and My HealtheVet
    I'd like to highlight another key component of the HealtheVet 
initiative: the My HealtheVet personal health record system, designed 
specifically to meet the needs of veterans.
    Personal health records are an adjunct to the electronic health 
records used in a clinical setting, providing patients a secure means 
of maintaining copies of their medical records and other personal 
health information they deem important. Information in a personal 
health record is the property of the patient; it is the patient who 
controls what information is stored and what information is accessible 
by others. Personal health records enable patients to consolidate 
information from multiple providers without having to track down, 
compile, and carry around copies of paper records. By simplifying the 
collection and maintenance of health information, personal health 
records encourage patients to become more involved in the health care 
decisions that affect them.
    The VHA My HealtheVet project was conceived as a way to help 
veterans manage their personal health data. My HealtheVet is a secure, 
web-based personal health record system designed to provide veterans 
key parts of their VHA health record as well as enabling them to enter, 
view, and update additional personal health information. Patients who 
take over-the-counter medications or herbs, or who monitor their own 
blood pressure, blood glucose, or weight, for example, can enter this 
information in their personal health records. They can enter readings 
such as cholesterol and pain, and can track results over time. My 
HealtheVet includes the Medlineplus.gov library of information on 
medical conditions, medications, health news, and preventive health 
from the National Institutes of Health and other authoritative sources. 
Veterans can use the system to explore health topics, research diseases 
and conditions, learn about veteran-specific conditions, understand 
medication and treatment options, assess and improve their wellness, 
view seasonal health reminders, and more.
    The implications of My HealtheVet are far-reaching. Clinicians will 
be able to communicate and collaborate with veterans much more easily. 
With My HealtheVet, veterans are able to consolidate and monitor their 
own health records and share this information with non-VA clinicians 
and others involved in their care. Patients who take a more active role 
in their health care have been found to have improved clinical outcomes 
and treatment adherence, as well as increased satisfaction with their 
care.
    The first version of My HealtheVet was released on Veterans Day 
2003, and more than 50,000 veterans are now registered to use the 
system. The My HealtheVet user community is growing, with over 300 new 
registrants joining each day. By the end of this summer, veterans who 
receive their health care at VA will be able to use My HealtheVet to 
refill prescriptions online. By this time next year, veterans receiving 
care at VA medical centers will be able to request and maintain copies 
of key portions of their health records electronically through My 
HealtheVet and to grant authority to view that information to family 
members, veterans' service officers, and VA and non-VA clinicians 
involved in their care. This would allow a relative to provide support 
and care--even at a distance--by being better informed about the 
veteran's health and medical status. Subsequent releases will provide 
additional capabilities, enabling veterans to view upcoming 
appointments and see co-payment balances.

Summary
    For decades, VA has developed innovative IT solutions to support 
health care for veterans. Over the past several years, VA has worked 
with Federal, state, and industry partners to broaden the use of 
information technology in health care. We have continued to enhance the 
capabilities of the EHR while protecting the privacy of our veteran 
population and maintaining the integrity of our systems. These efforts 
have laid the groundwork for the President's health IT initiative.
    The team of VHA developers, clinicians, and administrators who 
designed VistA changed the practice of medicine in VA by creating IT 
tools such as these to support the interaction between providers in VA 
and their patients, increase patient safety, and improve reporting and 
tracking of clinical and administrative data. VA is now involved with 
public- and private-sector partners in the development of a new 
national model for the use of IT in health care, featuring more 
sophisticated clinical decision support tools, increased data sharing 
among health care providers, and the availability of affordable EHR 
technology to providers large and small.
    When he announced his plan to transform health care through the use 
of information technology, the President noted our country's long and 
distinguished history of innovation--as well as our failure to use 
health information technology consistently as an integral part of 
medical care in America.
    We still have a long way to go in optimizing our use of information 
technology in health care; yet, we are not starting from scratch. 
Electronic health records, personal health records, data and 
communication standards, and sophisticated analytical tools--the 
building blocks of a comprehensive, national health information 
infrastructure--have already been implemented in some communities and 
settings and are maturing quickly. Our challenge is to create a 
technology infrastructure that will revolutionize health care without 
interfering with the human interaction between physicians and patients 
that is at the core of the art of medicine.
    The President recognized America's medical professionals and the 
skill they have shown in providing high-quality health care despite our 
reliance on an outdated, paper-based system. At VA, we know that the 
support of clinicians is essential to the successful implementation of 
electronic health records and new IT tools. Clinicians, while often the 
greatest proponents of health information technology, can also be the 
greatest critics. At VA, physicians, nurses, and other providers are 
actively involved in defining requirements and business rules for 
systems, prioritizing enhancements, and conducting end-user testing. 
This involvement improves system usability, increases user acceptance, 
minimizes disruption during upgrades, and most importantly, enables us 
to tailor systems to the needs of the health care community.
    Throughout VA, the electronic health record is no longer a 
novelty--it is accepted as a standard tool in the provision of health 
care. For 20 years, VA has been an innovator in health care IT. We are 
now at the brink of a new era in health care, in which a new national 
model for the use of IT will support the development of more 
sophisticated clinical decision support tools, increased data sharing 
among health care providers, and the broader availability of affordable 
EHR technology to providers large and small. As VA refines and expands 
its use of information technology, we look forward to sharing our 
systems and expertise with our partners throughout the health care 
community to support the President's plan for transforming health 
care--and the health of our veterans.
    Mr. Chairman, this completes my statement. I will now be happy to 
answer any questions that you or other members of the Subcommittee 
have.

    Senator Ensign. Thank you. I would like to thank the entire 
panel for its fascinating testimony. I would like to start with 
a round of questions. I think there is great work occurring at 
the VA and I am impressed with some of the health information 
technology projects that are occurring around the country. 
There is certainly excitement concerning the issue or health 
information technology. Dr. Clancy, you mentioned something 
that I think is really important--and something that we need to 
try and incorporate into health information technology--and 
that is the idea of best practices.
    If we can incorporate best practices with health 
information technology, I believe the savings range you're 
talking about would be more toward the higher end, rather than 
the lower end. In addition, the outcomes would obviously 
increase much more. From what I understand, only a quarter of 
physicians routinely use best practices in their daily clinical 
practice. So my question to you is, how can we incorporate best 
practices into health information technology?
    Dr. Clancy. We have supported the development of evidence 
that is the foundation for the kind of best practices you're 
talking about. What health IT is going to allow, is that 
information to be delivered to a specific patient for a 
particular encounter.
    Consider the example of an electronic rule that helps 
decide whether patients with pneumonia need to be hospitalized. 
I don't really need that if someone is in with a sprained 
ankle. So the real trick--and I think what will come out of the 
efforts to establish the infrastructure, and harmonized 
standards and so forth--is to develop the capacity; as better 
evidence develops, to be able to deliver relevant information 
at the point of care.
    If you think about all the investments that we have made in 
biomedical science both in the public and private sectors, 
there are more and more times when a clinician and patient are 
facing really a host of choices--which is great news for all of 
us. The trick is trying to have easy access to the evidence 
underlying those choices so you can figure out what is right 
for the patient. And that I think is going to be the great 
potential and one we're very excited about.
    Senator Ensign. I realize that the use of evidenced-based 
medicine and best practices are good. Is this something we just 
allow to happen, or is it something that we need to try and 
force to happen, or encourage to happen? We're policymakers. 
When we're writing laws, should we incentivize through payment 
systems, through Medicare, Medicaid, and the VA? How do we make 
sure that appropriate information is communicated? Do we try to 
incentivize in some way?
    Dr. Clancy. Through the support that you provide for the 
development of science at AHRQ, and NIH, and other places, you 
certainly are giving support for the substrate for that. 
Applying it locally, I think, is probably best done as it's 
customized to that setting. How that's going to be delivered to 
the point of care, in a very small practice is probably much 
different than how Dr. Kolodner will use it in VA and so forth.
    Senator Ensign. Dr. Kolodner, the VA has obviously invested 
quite a bit of money in health information technology. Do you 
have any figures on how much the VA has invested in health 
information technology? I would also like to know more about 
the return on investment, and how much is saved. I am not only 
interested in paperwork reduction, but also in decreased costs 
of care. Have there been any studies like this conducted in the 
VA? In other words, are there studies that show that a patient 
gets out of a hospital faster because a proper diagnosis was 
made? I don't know if any long-term studies have been 
conducted, or if any peer-reviewed studies have been conducted 
on cost savings and outcomes since health IT was introduced 
within the VA.
    Dr. Kolodner. Mr. Chairman, our system was developed over 
about 20 years, so it started when the technology was very 
rudimentary. Thus, the figures for the development of our 
system are probably not meaningful today. However, there are 
some studies that we have regarding the treatment of pneumonia. 
Because we are able to vaccinate such a high percentage of our 
veterans, in fact our benchmarks for vaccination exceed 
anything that is published in the country, what we have been 
able to show is that each vaccination we give saves about $290 
of our healthcare costs. We have actually had a decrease in the 
total number of hospitalizations for pneumonia in patients with 
chronic pulmonary disease, despite the fact that we doubled the 
number of veterans we treated over that period of time. This is 
one of the pieces of evidence that we have for the cost savings 
and the cost avoidance we have achieved from using our health 
IT.
    Senator Ensign. Dr. Brailer, I have one quick question as 
my time is about to expire. You mentioned interoperability. 
We've heard a lot about that issue today. To address Senator 
Allen's concern, how do we make interoperability technology-
neutral so that we aren't limiting technology as it is 
advancing? A few years ago, I remember that the French wanted 
to be ahead of the world consequently, so they bought everybody 
in the government a certain type of hardware and software. They 
were only ahead of the rest of the world for about a month--
because technology advances so quickly. Then, they were stuck 
with a certain type of information technology system. How do we 
make sure that interoperability standards are written in a 
manner that is technology neutral so that we're not 
unintentionally mandating and trapping ourselves into old 
technology?
    Dr. Brailer. Thank you, Mr. Chairman. The first precept 
that we want to follow, to make sure that technology stays at 
the state-of-the-art and we don't lock it in, is to make it a 
fluid process, which means to not require it through 
regulations which are very difficult for us to update. We have 
gone out to the private sector to develop a process for 
standards, not only to harmonize today, but to develop a 
roadmap and a process to keep them into the future. This way it 
can be a living and breathing part of the industry.
    Second, we want to put intellectual property, particularly 
the architecture, or the blue prints, in the public domain. We 
are not going to support, if you would, proprietary standards, 
or royalty bearing, or copyrighted standards that have some 
kind of a burden imposed on users, nor would we do so with 
architecture. While in our RFPs we allow proprietary 
implementations of the actual software, so the commercial 
market will come and invest, we want the architecture to be put 
in the public domain so they can be reviewed and turned into 
requirements for the whole industry.
    While we are relying on the private sector for 
developments, we're relying on governance that is public and 
private, and we're relying on an organic process that continues 
to stay ahead of technology.
    Senator Ensign. Very good, thank you. Senator Kerry.
    Senator Kerry. Thank you Mr. Chairman, thank you all for 
your testimony. Dr. Brailer, in the long time I've been here 
now in this committee, I guess I've been 21 years in the 
Senate, we've had a lot of fights about standards, and 
standards have often been able to become a roadblock unto 
themselves. What concerns me a little bit is that if you put 
everything on hold until we quote ``get the standards,'' we're 
going to ignore the reality of what's happening. A lot of other 
places, including the private sector in the United Kingdom for 
instance, they don't have standards across the board, they're 
developing them. But they have proceeded to put the technology 
out and they have--almost every desktop in the healthcare 
industry is crisscrossing information, and they're working it 
through to the great savings of the system and the savings of 
lives and greater efficiency.
    And to a degree the standards are evolving as they do that. 
So I mean my question to you is, can we afford to not provide 
significant incentives for the basic technology to get in 
place--and to many of healthcare delivers throughout the 
system, particularly given the experience of others in this 
field, including the VA over 20 years?
    Dr. Brailer. Well Senator, your question is a very good one 
and it is one that we've spent a lot of time looking at, not 
only within our own strategies but with success stories in the 
United States, and abroad. There are two strategies going 
forward. There is an adoption gap you've just described and 
second, there is this interoperability problem, making sure the 
data is portable. We are concerned about the taking, if you 
would, of an adoption forward strategy where we pushed that 
forward as a principal effort, because that could foreclose the 
one time opportunity we have in the United States to have 
interoperability and portability. For example, in the case of 
an electronic health record today, it's hard for a buyer to 
know which ones could be connectable to a system, which ones 
are interoperable and which ones are not.
    Senator Kerry. Well can I just--I don't want you--but I 
want to try to follow up on that if I can Dr. Kolodner. I was 
introduced I think to the VA system, I can't remember, maybe 
eight, 10 years ago, when I went through the VA hospitals. Let 
me ask you a question. Is the pain management system within the 
VA part of the VistA?
    Dr. Kolodner. Yes it is.
    Senator Kerry. It is, that's what I thought, because I 
remember seeing the pain management at the bedside a number of 
years ago, and I was struck by it. What really got me 
interested in this was, frankly, a visit to the VA and I became 
aware that the VA is already doing this way ahead of everybody 
else. Give us a kind of ballpark figure of what we're talking 
about, about the VA investment even if you discard the early 
startup years where you were kind of dealing with primitive 
technology et cetera. What would you--put it into sort of 
current dollars in effect?
    Dr. Kolodner. The current estimate is that about $450 
million a year is spent operating and maintaining the VistA 
system. That amounts to about $78 per enrollee per year, so if 
we avoid one or two lab tests, certainly one hospitalization, 
that more than covers the cost.
    Senator Kerry. Does that include the purchasing cost, 
capitalization cost?
    Dr. Kolodner. That includes all the costs that we have.
    Senator Kerry. What would you figure the capitalization 
costs was?
    Dr. Kolodner. I really couldn't give a figure.
    Senator Kerry. Well $450 million, you're talking about 
several billion dollars, correct?
    Dr. Kolodner. In terms of the hardware, probably a billion, 
a billion and half for the whole system. I think some of the 
people on the second panel may actually be able to give you a 
better number for that.
    Senator Kerry. I'm sure they will, but I'm trying to get--
Dr. Brailer, what's your estimate of what it would take. And 
one of the interesting things is with respect to the alignment 
of incentives. I think that's a really important issue here. 
Because the benefits, the expenditure has to come out of the 
pocket of the doctor. A doctor's office. The expenditure has to 
come out of the hospital or clinic, but the benefit doesn't 
flow to them. The benefit flows to Medicaid, Medicare, to the 
health insurance company, the HMO, correct?
    Dr. Brailer. That's right.
    Senator Kerry. So the question is, how do we provide an 
adequate incentive? It seems to me it's got to be through some 
kind of either tax incentive, tax credit, grant, direct grant, 
or low loan, some combination thereof, isn't that accurate?
    Dr. Brailer. Well again, I think the question we focused on 
is making sure that what is put in place ultimately serves the 
goal of portable information for consumers. And, the examples 
that we have of VA or Kaiser, or the Cleveland Clinic, or that 
in Britain are closed systems. Closed systems are not 
interoperable with others. And most of healthcare involves 
small doctor practices and hospitals.
    Senator Kerry. Let's take the healthcare system, what we 
saw is pretty effective.
    Dr. Brailer. Yes, absolutely.
    Senator Kerry. I would assume some people would love to 
replicate that. But they can't. Not so much because of 
operability but because of costs. I mean people would grab at 
that. I've heard that from people all through the system, they 
would love to have that, they just can't afford it. So how much 
are you figuring it really would cost to put a first rate, 
state-of-the-art, information system, health record system in 
America?
    Dr. Brailer. Well, we've not done our own estimates. 
Estimates range between $30 billion and $250 billion; and 
obviously, you can imagine with estimates that broad, there are 
numerous assumptions about technology cost, about changes, and 
about the way the industry operates. We have not developed our 
own estimate, but I think it's fair to say that it is 
expensive.
    Senator Kerry. Let's take the low ball on that $30 billion, 
the high ball is $250 we're spending $150 million. It's 
interesting you know, the VA is a government program using 
taxpayer dollars. They've got the system and the other place 
where we don't spend the money doesn't. Thank you Mr. Chairman.
    Senator Ensign. Senator Allen.
    Senator Allen. Thank you. And thank you to all of our 
witnesses for your insightful leadership and knowledge, and 
movement in the right direction, plus an example from Dr. 
Kolodner as to what the VA is doing.
    I do think that everyone does benefit, not just the 
taxpayers, from this, I think physicians and healthcare 
professionals also benefit from more accurate diagnoses, fewer 
errors. Obviously the goal of every healthcare professional is 
to have a successful outcome as best they can achieve it, in 
their profession. All of this gets to a few questions, and it 
is good that Dr. Brailer, that you all--you and Dr. Clancy are 
also talking with the clinicians, the people who are involved 
in it. We all could say, ``isn't this great and wouldn't that 
be wonderful,'' but if they don't think that works, and it's a 
burden, it's an aggravation, they're not going to want to do 
that as opposed to this paper-based system which I guarantee 
you most people undoubtedly don't like. But whatever the 
changes need to be accepted by them.
    Dr. Semerjian, in your testimony, you said that NIST is 
going to be certifying a standard for use in electronic patient 
records across government. How long will it take for that to 
take place?
    Dr. Semerjian. I would like to clarify that, I did not mean 
we would do the certification. When you set a standard, that's 
only part of the process. Then you need to establish a process 
that enables you to assess the compliance with the standards 
you have established. You need criteria for that assessment.
    We usually help with the development of that criteria, 
usually the certification is done by private sector entities. 
So first we have to set the standards, once the standards are 
set then we have to develop certification criteria.
    Senator Allen. All right. I'm using two words, but how long 
will it take you all to develop a standard?
    Dr. Semerjian. That standard has to be developed by the 
entire community. As a matter of fact, that is what Dr. Brailer 
is trying to do.
    Senator Allen. How long will that take? Since you brought 
up that the future is now.
    Dr. Semerjian. It is not going to be in months certainly. 
It will be in years.
    Senator Allen. What can we do? You all are the experts. 
It's going to take you a while to do this. What can we do, and 
that's the purpose of this hearing really, what can we do in 
Congress to assist you, or facilitate the development of 
uniform standards in this area? Maybe it's just leave you all 
alone and let you do your work. But is there anything we can 
do?
    Dr. Semerjian. I think Dr. Brailer's office already has the 
marching orders. Certainly I'm sure he wouldn't mind having 
some cheers on the sideline to encourage that work. But I think 
the process is pretty much in place. I think you should perhaps 
encourage--there are clearly a lot of players in this process 
as you heard VA, quality issues, and NIH et cetera. Certainly 
encouragement of further collaboration et cetera, but I think 
the process is in place. And everybody is working as hard as 
they can to make this happen.
    Senator Allen. Thank you. Dr. Kolodner, you showed this 
demonstration, and so that's all interoperable within the VA 
system and also within the Department of Defense. That may be 
the state-of-the-art right now, and in five, 10 years from now 
that may not be the state-of-the-art method of keeping track of 
veterans, or any non-veteran patient.
    However, and this is what the gist of all of this is, is 
that if one of these veterans, who you have all of this 
information, let's assume he or she gets injured and they go to 
the University of Virginia Emergency Room, or the Reno Nevada 
Emergency Room, and it's not a veteran's hospital they would 
not have that information, right? Is that correct or is there 
some way of making that available to the University of 
Virginia, or University of Nevada Hospital?
    Dr. Kolodner. There are some universities we have 
affiliations with and we're able to provide remote access, but 
if it is something as you described, where someone is injured 
and shows up today, that university capability is not there, 
that is why we're very eager to work with Dr. Brailer's office 
to move that forward. But one of the other possibilities is 
next year, when we provide the HealtheVet record to the veteran 
and are uploading the data from VistA, then the veteran 
themselves would have the capability of taking that information 
and sharing it with whomever they want. So that would be 
another mechanism for tying things together.
    Senator Allen. Real quick. Is this system able to 
communicate with the current commercially available systems?
    Dr. Kolodner. Right now, none of the systems out there 
communicate with each other.
    Senator Allen. The answer is no then. Real quickly, if you 
could each and everyone of you, I already asked Dr. Semerjian 
what can we do, and I guess you've looked at Senator Enzi's 
bill, but what if you could give us two sentences, what the 
Congress ought to do to assist you all in your missions?
    Dr. Clancy. Well, we appreciate the continued support for 
the practical technical assistance and the development of the 
evidence, and for deploying those as best practices, as the 
Chairman noted. I would also say that your interest in this 
topic is itself an incredibly potent stimulus across the 
country.
    Dr. Brailer. Sir, I think it is fair to say the 
Administration welcomes the interest that the Senate has shown 
in this topic. Our concern is making sure that given that we 
are now underway and moving as quickly as possible, that we 
don't actually have events that could slow us down. There is 
concern about legislation slowing down this process.
    Senator Allen. Do you see any such legislation introduced?
    Dr. Brailer. I wouldn't comment on specifics. I think I'm 
speaking more generally about creating a lot of uncertainty, or 
concern about which direction to go.
    Senator Allen. Would Senator Enzi's bill be a help or a 
hindrance?
    Dr. Brailer. I can't comment on that bill in particular, 
but I think as a general construct we are moving forward and 
it's very important for us to get these standards put in place 
quickly. We're working with the available parts and with the 
authority we have to do this. So we want to be able to make 
sure this is done quickly so we can speak to the issue that 
Senator Kerry raised about making sure that we can get 
interoperability done--then to move on to the other issues.
    Senator Ensign. Senator Allen, if I could interrupt quickly 
on that point I would greatly appreciate it. I think what 
Senator Allen is trying to convey, is that we would like to 
obtain suggestions from any and all, on how we can be a help, 
not a hindrance. We definitely don't want to be a hindrance in 
this case, we want to be helpful. We are open to suggestions. 
One of the purposes of this hearing is to listen to any 
suggestions you have now, or any suggestions you want to make 
in writing. We want to obtain your suggestions, so that we can 
incorporate your views and insights within legislation that we 
bring forward in the Senate, and include in any final product. 
We want to make sure that any legislation that moves forward is 
helpful, not hurtful.
    Senator Allen. We want to be good teammates. That's the 
point of this, is if you do see something, and I think that 
we're all well intentioned in a bipartisan manner on this. And 
sometimes people can help, and get in the way. On the other 
hand, there are things we can do to help propel and set the 
parameters that will help as you all interact with the people 
who are actually delivering the healthcare services in our 
country.
    Senator Ensign. And by the way, I have just one quick 
question on that issue. Do we have to make any modifications to 
HIPAA to make health information technology move forward? The 
VA has certain policies that it can get around. But if the VA 
system is connected to the private system, are there changes 
that need to be made? There was mention about the Stark laws 
and HIPAA--and I know there are other things that can be done 
to accelerate the deployment of this technology.
    Dr. Semerjian. If I may Mr. Chairman, this is a huge 
undertaking as everybody realizes, so clearly your continued 
support and interest I think will go a long way in making it 
happen.
    Senator Allen. Dr. Kolodner do you have anything to add? 
You all are doing it. We're trying to get the rest of the 
private sector moving that way as well, maybe not under the 
same system. Do you have any insight as to what the Congress 
should do?
    Dr. Kolodner. In terms of supporting the efforts that are 
going on in the Administration and with the standards 
community, I think your continued support is the best course of 
action, sir.
    Senator Allen. Thank you. Thank you, Mr. Chairman.
    Senator Ensign. Thank you. I would like to excuse this 
panel. I appreciate your comments, wonderful testimony, and 
great discussion. I would now like to welcome the second panel.
    On the second panel, we will hear from Ms. Susan Bostrom, 
Senior Vice President, Cisco Systems; Dr. John Glaser, Vice 
President and Chief Information Officer, Partners HealthCare 
System; Dr. Peter Basch, Medical Director for eHealth, MedStar 
Health; Ms. Pamela Pure, Executive Vice President, McKesson 
Corporation; and Ms. Karen Ignagni, President and Chief 
Executive Officer, America's Health Insurance Plans.
    Once again we will start to my left, and work our way down 
the table. We will start with you, Ms. Bostrom.

           STATEMENT OF SUSAN L. BOSTROM, SENIOR VICE

  PRESIDENT, INTERNET BUSINESS SOLUTIONS GROUP AND WORLDWIDE 
            GOVERNMENT AFFAIRS, CISCO SYSTEMS, INC.

    Ms. Bostrom. Thank you, Chairman Ensign, for inviting me to 
testify today. It's good to see you and Senator Allen, and we 
certainly appreciate the focus on healthcare information 
technology. As you mentioned, I'm the Senior Vice President at 
Cisco, I have responsibility for Internet Business Solutions 
Group, and also Worldwide Government Affairs. I also have the 
privilege of serving on two boards of directors that may be 
relevant, first is the Stanford Hospital in Palo Alto and 
second is Varian Medical Systems, which is a provider of cancer 
radiation treatment equipment. And both of these positions have 
given me an opportunity to see some of the challenges that the 
healthcare industry is facing, up close and personal.
    As Dr. Brailer mentioned, and as many of you are aware over 
the last 10 years the implementation of information technology 
and Internet applications specifically has been a major 
contributor to U.S. productivity growth, across a wide range of 
industries, retail, manufacturing, financial services, and in 
contrast the healthcare industry actually has been a drain on 
the U.S. economy, it's ranking in the bottom five industries in 
terms of its contribution to U.S. productivity based on a 
Harvard study.
    More recently Cisco, and other members of the IT industry 
have been asked the question, why is it that the productivity 
improvement that we've seen come from IT and other industries; 
why don't they apply this to the U.S. healthcare industry, 
especially when IT can be used not only to help control 
increasing costs, but also to help save the lives of our 
citizens? And my answer to that question is that now is the 
time for IT to move into that major contributor part as it 
relates to U.S. healthcare, and the reason being that there are 
really three factors that we're seeing in the healthcare 
industry right now, that say that it's ready for IT.
    First of all, there's a real sense of urgency for change. 
Because as you mentioned this is going to be tough, and so you 
need to really have those driving pressures for change.
    Second, there have been early pioneers in the industry, 
whether it's the VA, or whether it's private hospitals that 
have been moving forward and demonstrating that this is all 
possible.
    And then finally, there have to be significant returns. So 
is it going to be worth the financial and human capital 
investment that is going to be required to get some of these 
benefits? Is it going to be worth the kind of change that is 
going to be required?
    Regarding the first factor, the need for change, I think 
this point has been articulated this morning. As we all know 
the aging population combined with the advances in medical 
error are really driving up the increases in the healthcare 
cost structure. By 2010, healthcare spending could reach $2.5 
trillion and that would be about 15 percent of the U.S. GDP.
    One study as you mentioned has suggested that 30 percent of 
this spending is what we call waste, unnecessary test, errors, 
et cetera. And as a result half their insurance premiums are 
rising at four to five times the growth of inflation. Employers 
are reaching their limit. And employees are unwilling, or 
unable to bear anymore of the cost. And still we have a 
situation where 45 million Americans are uninsured. So the 
situation from a cost increase perspective, none of us want to 
give up quality care says that now is the time for change.
    The second factor affecting the use of IT in healthcare is 
that there are numerous success stories, from early adopters in 
the provider community. The hospital, the clinic, the doctor, 
this is where 80 percent of healthcare costs occur. And we've 
seen evidence across the board that early adopters of IT are 
getting benefits. There's a 400 bed community hospital in 
Silicone Valley that implemented a computerized position order 
entry system based on an EHR. They've got it spread across 
their 500 doctors and the results are that they've got order 
errors down by 50 percent, adverse drug reaction errors down by 
70 percent, and they're reducing the length of stay of the 
average patient by a day.
    A health system in Virginia has implemented what is called 
an EICU, or Electronic Intensive Care Unit. It allows one 
doctor to view six or seven different hospitals and those 
patients. ICUs account for 30 percent of our hospitals cost. In 
this case, this health system is reducing its ICU costs by 25 
percent. The average patient stay is down 20 percent, and of 
course the mortality rate is decreasing. They're seeing more 
and more patients coming out with better outcomes because 
they've got an ICU specialist present.
    These healthcare IT pioneers have embraced technologies 
that are now available, whether it be broadband, or whether it 
be wireless, to drive improved results at lower costs. But 
unfortunately these pioneers in healthcare are the exception, 
not the rule. While industries on average in the U.S. spend 
about $8,000 per employee per year on information technology 
capital, the healthcare industry spends $1,100 per employee per 
year.
    It's discouraging to think about the investment that is 
going to be required for the healthcare industry to catch up. 
But if they do, the returns can be significant. Based on our 
analysis at Cisco, we believe that up to $280 billion a year, 
that is 17 percent of the $1.6 trillion spent on healthcare 
could be saved, if just 8 to 10 proven IT applications could be 
adopted across the entire industry.
    Just look at some of the examples, EICUs spread across the 
entire industry could save $10 billion a year. In addition to 
controlling costs, these applications could help to reduce the 
hundreds of thousands of medical errors that occur each year, 
so that doctors have up-to-the-minute information at the point 
of care with the patient. Despite the proven value of these IT 
solutions though, when we look at the adoption of them they 
range anywhere from 5 to 20 percent within the provider 
community, and I think we're all too familiar with what some of 
the road blocks have been. Lack of interoperable data 
standards, across the industry. It's a highly fragmented 
industry. It's so much different than you would see in 
financial services, where they've been able to implement 
standards, and there's a misalignment of financial incentives. 
So who pays the bills, and who provides the care, the 
incentives are quite different there. But all of these road 
blocks can be tackled through the private sector and the 
government working together. Many of these actions are already 
underway, but if you look at it, the Federal and the state 
governments pay for 50 percent of all healthcare cost, so 
therefore you can be highly influential in determining how 
providers decide to invest, and where they should invest, and 
where will they get returns. Both from the government and in 
terms of quality of care when they make those investments.
    Accelerating IT----
    Senator Ensign. If you could wrap up please.
    Ms. Bostrom. In conclusion, if we could save this $280 
billion, we could get down to a gross domestic product 
healthcare spending being like it was in the 1990s in terms of 
representing GDP and we could use that money for ensuring that 
all Americans have healthcare insurance and coverage. Thank 
you.
    [The prepared statement of Ms. Bostrom follows:]

Prepared Statement of Susan L. Bostrom, Senior Vice President, Internet 
   Business Solutions Group and Worldwide Government Affairs, Cisco 
                             Systems, Inc.

    Thank you, Chairman Ensign, for inviting me to testify today. I 
would also like to thank Ranking Member Kerry and the other Senators on 
the Subcommittee for holding and participating in this important 
hearing on health information technology.
    My name is Sue Bostrom, Senior Vice President of the Internet 
Business Solutions Group (IBSG) and Worldwide Government Affairs at 
Cisco Systems, Inc.
    I also have the privilege of sitting on the board of directors at 
Stanford Hospital and Varian Medical Systems, a manufacturer of 
radiation equipment for cancer treatment. These positions have given me 
the opportunity to witness first-hand the challenges facing major 
sectors of the healthcare industry--providers, payers, pharmaceutical 
and medical device firms, and government agencies.
    My goal here today is to share with you what we've learned through 
Cisco's customers and in our own practice in the area of improving 
healthcare quality, increasing productivity and driving down costs 
through technology.
    There is one overwhelming challenge faced by all sectors--the 
spiraling cost of health care. As you well know, healthcare spending in 
the U.S. has topped $1.6 trillion a year and will reach $2.5 trillion 
by 2010--that's more than 15 percent of the Gross Domestic Product.
    Meanwhile, healthcare insurance premiums are rising at four to five 
times the rate of growth in wages and inflation.
    Much of these rising costs can be attributed to underlying 
demographic trends and advances in medical care. The healthcare 
industry is being asked to offer ever-more sophisticated and expensive 
treatments for an aging population.
    Another major cost driver is the enormous amount of ongoing 
paperwork, waste, and re-work. For instance, of the 30-billion 
individual healthcare communications in the United States, more than 90 
percent of them are sent by fax, surface mail, or telephone. A full 30 
percent of the cost of healthcare can be attributed to these poor 
healthcare practices. In fact, this industry ranks among the bottom 
five industries in terms of contribution to U.S. productivity, 
according to a Harvard University study.
    If we look at other industries, we see a direct correlation between 
productivity gains and investment in information technology (IT) 
capital and solutions. These industries, on average, invest about 
$8,000 per year per employee in IT. In comparison, the healthcare 
industry invests only $1,100 per worker.
    But saving money is only one part of the equation. Information 
technology can also help reduce medical errors and save thousands of 
lives each year.
    Estimates vary, but experts believe between 44,000 and 98,000 
people die in the United States each year from preventable medical 
errors.
    The greatest impact on cost, productivity, and quality can be 
driven at those points where patients receive care--in the physician's 
office and in the hospital.
    If healthcare organizations widely adopted just one information 
technology solution--electronic health records (EHR)--the industry 
could save close to $78 billion annually.
    Taking a quick look at the IT trends in healthcare, we find that 
deployment of technology has been relatively slow, with implementation 
of each wave of new applications taking decades rather than the 5 to 10 
years it takes in other IT-oriented industries.
    The first applications implemented in the late 1980s to early 1990s 
were departmental applications--lab automation, pictorial archiving 
systems, human resources systems, and patient admitting applications--
all solutions designed to make specific departments in a healthcare 
provider more efficient.
    The next two waves of applications in healthcare have been broader, 
including both enterprise solutions--such as electronic health record 
systems, clinical decision support systems--and inter-enterprise 
applications that cross institutional boundaries, such as remote 
patient monitoring, and automated payment programs that link providers 
with payors.
    Despite the proven value of these applications in specific 
institutions, less than 5 percent of healthcare organizations have 
deployed electronic health records, 10 percent computerized physician 
order entry systems (CPOEs), less than 3 percent have adopted clinical 
decision support and less than one percent have instituted support for 
Tele-Specialty--specifically electronic Intensive Care Units (eICU).
    The most challenging roadblocks to adoption overall are: a lack of 
precise interoperable standards, a misalignment of financial incentives 
across the industry, and, finally, the inherent reluctance to change--
especially when human life could be on the line.
    Like many enterprises, we have found at Cisco that IT can play a 
significant role in improving the quality of care while driving down 
costs. Cisco Systems provides healthcare benefits for more than 65,000 
employees and dependents worldwide. Looking to expand the use of 
technology to improve the healthcare provided to our employees and 
dependents, Cisco is now focused on promoting the more rapid adoption 
of electronic health records, electronic prescribing and secure 
physician-patient messaging, and will be adopting a pay for performance 
program in 2006 that supports these objectives with key physician 
groups serving Cisco employees and dependents.
    The advantages of e-prescribing alone are significant, given that 
50 percent of calls to physician offices are for prescription issues, 
and the average physician writes 30 prescriptions a day. The potential 
impact of e-prescribing includes an increase of 27 percent generic 
prescribing, a reduction in adverse drug prescribing of 15 percent, and 
an average per physician savings of $28,000 per year based on existing 
studies.
    Cisco has also had the privilege of participating in a number of IT 
healthcare deployments that clearly demonstrate the significant role 
information technology (IT) plays in improving healthcare quality, 
reducing costs, and enhancing industry productivity.
    For example, we helped a community healthcare center in Florida 
deploy an electronic health records solution, which has cut lab 
turnaround time by 89 percent and is saving the center over $2 million 
annually.
    In Virginia and North Carolina, we assisted a healthcare delivery 
network in establishing a picture archive and communications system 
(PACs)--that delivers radiology reports to doctors in minutes instead 
of days.
    And in the Mountain West, we helped a regional medical center set 
up a computerized physician order entry system (CPOEs), which reduced 
antibiotic-related adverse drug events by 70 percent.
    I offer these examples to illustrate that health information 
technology is working to fix the major problems facing the healthcare 
industry today.
    Imagine if electronic health records (EHR), picture archive and 
communication system (PACs) and physician computer order entry system 
(CPOE) could be implemented worldwide? Tens of thousands of lives could 
be spared and billions of dollars saved.
    Indeed, study after study demonstrate the impressive impact 
healthcare IT solutions have on rising costs and quality of care.
    With broad adoption of proven technology solutions, the industry 
could save over $200 billion annually, enough to bring healthcare costs 
in line with the current rate of inflation, or cover all the uninsured 
according to a variety of studies and presentations from Center for 
Information Technology Leadership (CITL), and American Health Quality 
Association (March 2004).
    It's clear that the next revolution in healthcare will use 
information to drive patient-centric, safe, and efficient care. A 
fitting term for this model is ``Connected Health.''
    What is Connected Health?

   Connected Health is the power of technology--not simply to 
        automate old tasks--but to facilitate richer and better health 
        care interactions between patients, physicians, and insurers.

   Connected Health is the power of technology to place 
        information at the point of care, empowering both providers and 
        patients to make better, more informed decisions.

   Connected Health is the power of technology to connect 
        doctors with hospitals, hospitals with pharmacies, pharmacies 
        with insurers, insurers with patients, and finally, patients 
        with doctors so that no one is stranded on their own island of 
        information.

    Changing the way information is handled may not seem like a 
development to rival antibiotics or X-rays, but it has the potential to 
be every bit as revolutionary.
    So what's the hold up? Why is healthcare among the five lowest 
ranking industries in information technology spending per employee?
    For one, the industry has historically under-invested in IT, partly 
because healthcare spending is decoupled from healthcare funding.
    And clearly complexity plays a part. Connected Health systems 
require significant investment, standards, metrics, effective change 
management and, above all, a top-down commitment to transformation.
    Healthcare organizations can get started by looking at their 
greatest needs, studying what other institutions have done, and 
strategically deploying first-strike applications with proven impact.
    The challenge is great, but the stakes are higher.
    Healthcare information technology has proven its efficacy. All 
that's needed now is the willpower and resources to deliver the 
solution nationwide.
    Thank you again, Mr. Chairman, Ranking Member Kerry, and other 
members on the Subcommittee for inviting me here today. I am happy to 
answer any questions.

    Senator Ensign. Thank you. Dr. Glaser.

        STATEMENT OF JOHN GLASER, Ph.D., VICE PRESIDENT/
         CHIEF INFORMATION OFFICER, PARTNERS HealthCare

    Dr. Glaser. Thank you Senators, my name is John Glaser, I 
am the Chief Information Officer for Partners HealthCare in 
Boston. Partners provides medical care. Our academic medical 
centers, community hospitals, health centers, physician 
offices, and visiting nurses take care of over a million unique 
people a year.
    For 18 years I've been responsible for the implementation 
of information technology to support the care that is delivered 
by our physicians and nurses, and these technologies, include 
the electronic medical record, e-prescribing, tele-medicine and 
medical imaging system, are used daily by over 10,000 care 
providers across Partners. I was actually responsible for the 
implementation of the provider order center at Brigham--that 
Senator Kerry mentioned, in his comments. I think it's fair to 
say that Partners is one of the most extensive healthcare users 
of information technology. Not only in this country but across 
the world.
    Now based on our experience, I think there is no question 
at Partners that the systems when thoughtfully implemented can 
lead to significant improvements in the care that we deliver. 
When we study ourselves, we find that serious medication errors 
on the inpatient side have been reduced by 55 percent. We find 
that the appropriateness of our care to our diabetic population 
increased by 30 percent. We find we've reduced our expenditures 
on expensive medications by 15 percent, and we've increased the 
productivity of our visiting nurses by 25 percent. Now if you 
use our experiences, and the experiences of others, the Center 
for Information Technology Leadership, a research group within 
Partners IS, has estimated that if you took these systems and 
made them interoperable and deployed them across the country, 
it would provide a net savings of $78 billion a year, 
equivalent to about 5 percent of the Nation's healthcare 
expenditure. A fairly conservative estimate, but nonetheless a 
sizable amount of money.
    More importantly from the human side, there would be a 
reduction of about 2 million medication errors a year across 
the country from these kinds of technologies. Partners commits 
about $50 million a year to doing these kinds of systems and is 
committed to doing so for the foreseeable future, and the 
commitment grows by 15 percent a year.
    In fact the application of these systems is the most 
strategic, critically important initiative that we have across 
Partners, and I believe, in working with my colleagues across 
this industry, that the industry as a whole is committed to 
advancing IT use. Healthcare providers, joined by employers, by 
insurance companies, by patients, by the industry overall are 
leading this effort and will continue to do so.
    Nonetheless, I think the Federal Government can be quite 
helpful to us, and there are five things that I think you all 
ought to do.
    Number 1, these systems pose a very difficult financial 
challenge for most healthcare providers. This is what I brought 
up earlier. In our experience the electronic medical record can 
cost the physician $100,000 over 5 years. That's what they're 
going to pay out of their pockets. Yet 89 percent of the 
financial value that results accrues to others. So if we reduce 
medication errors, there's value to the payer, there's a value 
to the employer, there's obviously value to the patient, but 
there may be no fiscal reward for the physician. So the 
physician while investing may see very little of the reward. 
Healthcare's rather peculiar in this country. The physician is 
generally not financially rewarded for delivering high-quality 
care and not surprisingly they will hesitate to make 
investments which cause them to lose money.
    As the country's largest insurer and the largest employer, 
you can decide to reward the physician for delivering better 
care, and for making the investments needed to deliver the best 
care that they can. I also think there's some stuff you can do 
regarding Stark, that allows us to share the cost with the 
physicians who are out in our community.
    Number 2, the country does need to settle on standards that 
enable us to connect these systems and share, as appropriate, 
the patient's data between those that are involved in care. 
This is not always a shortage of standards, but rather failure 
to decide which standards to use across the country. The 
Federal Government can convene, and through its size, stature, 
and role can work with us to make decisions regarding 
standards. We're not going to wait for standards. A lot of 
people are dying today. We need standards. But we're not going 
to wait. Nonetheless progress should be made along those lines.
    Number 3, implementation of these systems is a difficult 
challenge for the physician. They must choose applications that 
involve complex technology and they must change the way they do 
work. Now if you're a Partners physician, I can help you. If 
you're an independent physician, or a small hospital, you have 
no one you can turn to. Confronted with this daunting 
implementation challenge and lack of someone to help you, 
physicians will either hesitate to adopt, or face an 
unnecessarily risky implementation. The Federal Government can 
help establish mechanisms to support the independent physician 
and small hospital, and it has begun to do so through the 
quality improvement organizations.
    Number 4, in my 18 years I've seen many advances in 
information technologies and these advances will continue 
through the rest of my career. The industry needs to learn 
which of these new technologies hold great promise, and which 
of these are of relatively minimal value. For example, if we're 
able to actually integrate all of the providers in Eastern 
Massachusetts, how much unnecessary testing can we avoid. We 
don't know the answer to that kind of question. Throughout the 
years the Federal Government most notably through AHRQ and the 
National Library of Medicine has been a significant sponsor of 
research and innovation design to answer these questions. This 
supported sponsorship is essential, and it's essential that it 
continue.
    Number 5, across the country, over 100 communities have 
come together to begin to put in place the infrastructure 
necessary to share electronic health records across their 
region, or their community, or their state. In Eastern 
Massachusetts, MA SHARE, and Massachusetts eHealth 
Collaborative lead these efforts. These efforts hold great 
promise, but they're very early and there's much to be learned. 
The Federal Government can provide seed funding to help these 
initiatives get started, and the government can work with 
organizations such as the eHeath Initiative, CHIME which is the 
healthcare CIO gathering, to establish mechanisms through which 
these communities can share experiences, ideas, and work with 
each other. The Health Research, and Service Administration has 
done a nice job in the Federal Government of assisting a lot of 
this.
    So anyway, I hope my comments are useful, and I look 
forward to the discussion that follows. Thank you.
    [The prepared statement of Dr. Glaser follows:]

    Prepared Statement of John Glaser, Ph.D., Vice President/Chief 
                Information Officer, Partners HealthCare

    Mr. Chairman and Members of the Subcommittee: Good morning. My name 
is John Glaser. I am the Vice President and Chief Information Officer 
of Partners HealthCare. Partners HealthCare is an integrated system of 
medical care whose members include the Brigham and Women's Hospital, 
the Massachusetts General Hospital, community hospitals, health 
centers, physician practices and visiting nurses. Over the course of a 
year, Partners physicians and nurses will deliver care in 4,000,000 
outpatient visits and 160,000 admissions.
    I am also the President of the Board of the eHealth Initiative 
(eHI). The eHealth Initiative represents the multiple and diverse 
stakeholders in healthcare and health information--consumer and patient 
groups, employers and purchasers, health plans, hospitals, 
laboratories, practicing clinicians, public health agencies, HIT 
suppliers and others--dedicated to driving improvement in the quality, 
safety, and efficiency of healthcare through information and 
information technology.

Implementation of Electronic Medical Records (EMRs)
    For the past 18 years, I have had the overall responsibility for 
the implementation of electronic health records (EHRs) at the Brigham 
and Women's Hospital and then Partners HealthCare.
    During this time, we have implemented computerized provider order 
entry (CPOE) at Brigham and Women's Hospital, the Massachusetts General 
Hospital, the Faulkner Hospital and the Dana Farber Cancer Institute. 
Physicians use CPOE to enter 30,000 clinical orders a day. Medical 
logic is applied to the order to ensure, for example, that the 
requested medication is safe or the radiology procedure being ordered 
is appropriate. Implementation across all our community hospitals will 
be completed by the end of next year.
    Currently, we have 2,600 Partners physician users of our electronic 
medical record (EMR) and over the course of the next 4 years, we will 
add an additional 2,000 physicians. Our implementation efforts are 
currently focused on physicians in our community practices.
    We have applied telemedicine to offer specialist second opinions to 
patients around the country and the world. And we support the home 
monitoring of patients with chronic diseases and recent surgical 
patients.
    We provide technologies to enable patients to converse with their 
physician and access their medical record. Our base of 25,000 patients 
is growing at a rate of 7,000 new patients a year.
    More recently, we have begun to invest in the information 
technology necessary to help our physician researchers understand the 
genomic basis of disease. These systems help the researcher, for 
example, to determine why most asthma patients respond to steroid 
therapy, while 10 percent do not.
    In collaboration with regional providers and payers, we have 
recently begun to integrate our EHRs with those of other providers 
across the Commonwealth of Massachusetts.

Health Information Technology and Patient Safety
    Based on our extensive experience, and those of others, there is no 
question that information technology, when thoughtfully applied, can be 
leveraged to effect significant improvements in the safety, quality and 
efficiency of the care that we deliver.
    Studies of CPOE with decision support, at the Brigham and Women's 
Hospital, show that medication errors were reduced by 80 percent and 
serious medication errors were reduced by 55 percent.
    Additional studies of CPOE show decreases in the time spent by 
patients in the hospital, significant reductions in inappropriate 
antibiotic use, increased appropriateness of medication and radiology 
procedure orders and significantly faster notification of physicians 
regarding alarming patient test results.
    Electronic medical record reminders resulted in a 30 percent 
increase in diabetic patients and 25 percent increase in patients with 
coronary artery disease receiving recommended care.
    Our electronic medical records medication ordering system provides 
guidance to the physician and has led to 15 percent of all orders being 
changed to lower cost, but equally effective medications.
    Remote monitoring of elderly patients with congestive heart failure 
not only leads to earlier detection of possible deterioration in heart 
function, but also results in a 25 percent improvement in productivity 
for our visiting nurses.
    When data such as ours and others are extrapolated across the 
country, the Center for Information Technology Leadership, a healthcare 
information technology analysis group at Partners, finds that the 
widespread implementation of interoperable EHRs would provide a 
national net savings of $78B per year (5 percent of the Nation's total 
healthcare costs) by avoiding medical errors, reducing unnecessary care 
and improving administrative efficiency. Such systems are projected to 
eliminate 2,000,000 adverse drug events per year across the Nation.

Challenges of Health Information Technology
    While offering significant gains, the implementation of these 
systems and the achievement of improvements in patient care are very 
complex and difficult undertakings.
    Physicians and nurses must learn new ways of doing their work. 
Hospital and physician practice workflow must change. At times, 
performing a task using a computer takes longer than using paper. For 
providers already facing extreme demands on their time, these changes 
and time commitments can be overwhelming.
    Healthcare providers confront a complex financial decision when 
they seek to invest in these applications. While they are committed to 
the mission of delivering the best possible patient care, these systems 
represent significant capital commitments. With a reimbursement system 
that very often does not reward them for improving quality, or support 
them in making these investments, their precarious financial positions 
and limited resources prevents them from pursuing these systems. For 
example, an EMR can have a five-year cost of $100,000 per physician. 
This cost can pose an insurmountable barrier for a physician who is 
facing decreasing Medicare reimbursement.
    Assuming that physicians and hospitals can overcome the difficult 
changes in clinical practice and can find the necessary funds, the 
majority of them have little experience with the acquisition and 
implementation of EHRs. They want to proceed but they don't know how 
and they are rightfully concerned with making significant mistakes. 
This is particularly true for the small physician practice and small 
community hospital.
    At Partners we confront these challenges every day. And every 
hospital, physician practice, health center and visiting nurse agency 
in the country confronts these challenges.

Community Health Information Exchange
    To these challenges, we are beginning to add a new dimension of 
complexity: the formation of regional and national networks to 
integrate EHRs across providers. There is no question that 
interoperable EHRs are a necessary step in our efforts to improve 
patient care. But there is also no question that there is very little 
experience with how to organize communities, develop the necessary 
information technologies, identify strategies for addressing complex 
issues such as privacy, and mechanisms to ensure the ongoing financial 
stability of these efforts. This complexity is compounded by the 
bewildering array of standards that are often inconsistent, hindering 
our ability to efficiently connect our systems.
    There is much that provider, payers, employers, and patients can do 
to address these challenges and further the thoughtful adoption of 
EHRs. Partners HealthCare is an example of an organization that is 
committed to improving care through the use of information technology. 
We spend over $50M annually to acquire, implement and support EHRs. 
(This investment is in stark contrast to the $150M annual budget of the 
Office of the National Coordinator for Health Information Technology. A 
budget that, while well intentioned, is clearly insufficient to move 
the Nation toward the widespread adoption of interoperable electronic 
health records).
    Partners is not alone. Many provider organizations are making 
significant investments in EHRs. Across the country, the healthcare 
community and its stakeholders are coming together in national and 
regional forums to discuss the industry's collective efforts, learn 
from each other and jointly develop analyses, guides and positions.

The eHealth Initiative
    The eHealth Initiative is supporting these efforts through its 
formation of working groups of physicians, employers/purchasers and 
community collaboratives whose members come together to address the 
mutual challenges. The eHI, national meeting, Connecting Communities 
for Better Health (CCBH), held 1 month ago, was attended by 
representatives of over 100 communities that have begun to implement 
local interoperability. The Parallel Pathways Framework of eHI has been 
hailed as an important guide to the industry as it seeks to integrate 
financial incentives, quality reporting, EHR adoption and community-
based interoperability.

Federal Leadership
    And while, the healthcare industry and those who have a stake in 
the industry's efforts to improve care, must lead and are leading these 
efforts, the Federal Government must play a critical role in supporting 
this work.
    A very significant national hurdle is the misalignment of financial 
incentives for EHR adoption. The provider must bear 100 percent of the 
costs of these systems and yet studies suggest that 89 percent of the 
economic benefit flows to groups and organizations other than the 
provider. Improvements in the safety of patient care will benefit the 
employer, payer and patient but there is little economic benefit to the 
provider. Hence the provider is confronting an investment that, while 
improving the care that they deliver, has a high likelihood of leading 
to an economic loss for the practice. At Partners, we have begun to 
address this problem through very constructive discussions with local 
payers that have led to modest reimbursement to physicians who adopt an 
EHR by the end of 2006.
    The Federal Government is the country's largest employer and payer. 
The Federal Government can alter its Medicare reimbursement approaches 
and the provider arrangements for its employees such that improvements 
in care and investments in necessary information technology will be 
financially rewarded.
    The inconsistency, and at times dearth, of necessary data and data 
exchange standards hinders our ability to create the necessary 
interoperability between EHRs and our ability to report on the quality 
and cost of the care that we deliver. The Federal Government can use 
its powers of convening and persuasion to help the industry resolve 
these problems. And the government can insist that the Federal health 
sector adopts and implements standards.
    A community hospital or small physician group in Massachusetts that 
wants to invest in information technology can turn to me and my staff 
for assistance. However, if you are small physician practice or a small 
community hospital, there may be no one who can provide this 
assistance. Mechanisms are needed to bring information technology 
support to those providers who do not have the benefit of an 
information technology staff. The Federal Government can leverage its 
resources to help establish and sustain needed support mechanisms. The 
current Doctors Office Quality Information Technology program (DOQ-IT) 
is an example.
    The Federal Government should consider changes in the Stark and 
Anti-Fraud laws to enable organizations such as Partners to extend its 
EHRs and its implementation expertise to physician practices and share 
the costs with the physician.
    Partners is an active member of MA SHARE and the Massachusetts 
eHealth Collaborative efforts to provide Commonwealth-wide 
interoperability of EHRs. And at the eHealth Initiative, we see over 
100 comparable efforts across the country.
    These efforts need to be nurtured and they invariable need access 
to seed funds. While they should strive to be financially self-
sustaining within a couple of years, the availability of federally 
sponsored grants and loans will be a critical contributor to these 
early efforts.
    While we at Partners have been implementing EHRs for many years, 
there is still much that we do not know about their impact on patient 
care. New technologies and innovations bring new opportunities, but 
studies are needed to help the industry understand the potential 
contributions of these opportunities. We know even less about the value 
of regional and statewide interoperable EHRs. The Federal Government, 
in particularly AHRQ, has been a major supporter of research on the 
value and impact of information technology in medical care. These 
studies provide very important insight for all of our efforts and 
should continue.
    The Federal Government has extraordinary leadership leverage. Both 
elected and appointed officials can use this role to convene the 
industry, to encourage its participants to resolve problems, to use 
speeches and appearances to continuously stress the need for 
interoperable EHRs and to respond, as needed, to industry problems by 
crafting appropriate legislation. This role is not a transient one; 
rather it will be needed for years to come. The industry does listen.

Conclusion
    I know that many of the recommendations described above are being 
analyzed and several are in the process of being put in place. And I 
know that I will have undoubtedly failed to appreciate the complexity 
and nuances of carrying out these recommendations. However, I live the 
reality of implementing EHRs every day and I see the reality of my 
colleagues across the country. From those perspectives I believe that I 
can see what is needed.
    All of us, and those who we love, seek healthcare. I won't recite 
the now well-known numbers that illustrate the litany of problems that 
afflict our healthcare system. I do know that I want my kids and my 
eventual grand kids to have a healthcare system that has made major 
strides in safety, appropriateness and efficiency. And I have committed 
my professional life to helping to create that system through the 
application of information technology.
    Providers, payers, employers and patients must shoulder most of the 
burden to improve healthcare. And they are willing to do so. I am often 
struck, during conversations with health care leadership across the 
country, by the depth of their commitment and that they will continue 
their EHR efforts, even if the Federal response is minimal.
    However, the Federal Government actions or inactions will have a 
very significant impact on the pace of change, the degree to which we 
avoid mis-steps and our eventual success.
    Thank you for the opportunity to testify. I welcome the opportunity 
to respond to your questions.

    Senator Ensign. Dr. Basch.

    STATEMENT OF DR. PETER BASCH, MEDICAL DIRECTOR, eHealth 
                  INITIATIVES, MedStar HEALTH

    Dr. Basch. Good morning, thank you, Mr. Chairman, Senator 
Allen. And thank you for the opportunity to address you today. 
I've also submitted more detailed testimony for the record. My 
contribution to this panel is to provide the input of a 
practicing general internist who has used an EHR, in practice 
for almost a decade, and also to show the Subcommittee concrete 
examples of how the EHR can be used to transform care 
particularly in the setting of a small practice, where 80 
percent of outpatient care is delivered in this country. I also 
hope that my testimony answers the Chairman's questions to Dr. 
Clancy regarding how to bring best practices to the level of 
the physician practice.
    I wholeheartedly agree that the EHRs and HIT have the 
potential to make healthcare better, safer, and more 
affordable. But I wish to introduce this note of caution. The 
mere adoption of interoperable EHRs by themselves is not likely 
to result in the significant value that has been talked about 
today. Realizing the full potential of the EHRs requires 
additional advanced software, secure connectivity, and most 
importantly a sustainable business case for care management and 
quality. Without these additional components, coupled with 
reimbursement and policy changes, EHRs are more likely to be 
used simply to automate the administrative functions in 
practice, such as documentation, and coding for billing 
purposes.
    This is a view of the electronic health record that I use 
in my own office, and as good as it is by itself, it's 
essentially a digital filing cabinet. I agree that what it does 
give me is the potential to see it anywhere, anytime; as well 
as to be able to look at vitally important things such as 
problem lists, medications, allergies, and other important 
clinical data.
    However when we add in advanced decision support, it 
becomes far more powerful. I'm not quite sure how well this 
shows up, but let's assume in a real practice setting of a 7 to 
10 minute office visit, this patient comes in for a sinus 
infection. What this advanced EHR reminds me of, by having the 
little boxes on the bottom which are all chronic conditions, 
(defined as important by my health system) other conditions 
that this patient has. So while I am there to treat the patient 
for the problem he came in with, I see I also should address 
these other conditions. In this instance that of him being on a 
blood thinner, having diabetes, hypertension, and high 
cholesterol.
    We can go a step further in using advanced decision 
support, and this is what it could look like in a physician's 
office. Here it is granular, tailored to the specific patient 
and focused on his or her age, sex, labs, diagnoses, and meds. 
And it's actionable. I'm able to look at it and take immediate 
action.
    In this decision support prompt for example, while this 
patient is here for a sinus infection, if I chose to look and 
pay attention to it, I would see that I have made some critical 
errors. I have not created a stop-date for this medication (a 
blood thinner) or set a target level. And let me reiterate 
this, this is an exceedingly dangerous medication and without 
paying attention to those particular issues, patients can be 
harmed.
    In this next slide, which is showing decision support for 
diabetes, here I'm reminded of several key aspects of diabetic 
care, such as the fact that I haven't enrolled this patient in 
a diabetes education program; or this patient is not at target 
goals for cholesterol management; and I haven't done any of the 
necessary diabetes monitoring tests that we all recognize are 
important.
    My point is, that very few EHRs provide what I've just 
shown you in these last two pictures. Either this level of 
detail, or decision support that is actionable. But given these 
tools and the incentives to use them, we can do more than what 
I would call informed care. We can begin to transform care. 
Now, what do I mean by transform care?
    Well the first step in care transformation is realizing 
that all care does not have to occur in a doctor-to-patient 
office visit. The first step in my view is forming a 
partnership with the patient. Here the EHR can facilitate this 
collaboration with patient-level decision support. And this can 
be done through a secure patient portal, interconnected with an 
EHR, as you can see on the screen, or with a personal health 
record (PHR). For example if I'm hounding my patient about 
getting something called microalbumin, the patient can click on 
the question mark and actually see what that means.
    Taking healthcare transformation to the next step requires 
using a registry. This allows us to practice proactive care, or 
population management, and this is integrated with my records 
so it's fed with real clinical data. It allows me to address 
guidelines and best practices, not just when patients come for 
a visit, but for my entire population. I can use this to look 
at all of my diabetic patients, for their blood sugars, their 
cholesterols, and so forth.
    Here's an example of a secure patient portal, linked to the 
EHR for chronic care management, as well as some acute care 
management, which can be done safely and more efficiently 
without requiring a face-to-face office visit.
    What I've just shown you is the use of the EHR to not just 
automate care, but to inform care through detailed actionable 
decision support, and to transform care through the use of 
patient-directed education, an integrated registry, and a 
patient portal. This is where I believe the majority of the 
benefit of EHRs will arise.
    And this can be done by ordinary physicians even in the 
small practice settings. These value-laden activities are 
rarely performed even in technologically advanced practices as 
they add cost to the already expensive EHR. And more 
importantly, their use can substantially reduce the physician's 
income, as unlike office visits or procedures, time spent on 
care coordination, population management, and e-care is 
currently uncompensated. However if coupled with new payment 
paradigms including thoughtful pay-for-performance, these 
advanced features of the EHR can help them make the decade of 
the EHR a success, with care that truly becomes better, safer, 
and more affordable.
    Mr. Chairman, and Senator Allen, and other members of the 
Committee, I thank you for the opportunity to address you 
today, and I'm available to answer your questions.
    [The prepared statement of Dr. Basch follows:]

       Prepared Statement of Dr. Peter Basch, Medical Director, 
                  eHealth Initiatives, MedStar Health

    Mr. Chairman and the members of the Subcommittee:
    I am pleased to appear before the Subcommittee to discuss the 
promise of electronic health records (EHR), and the barriers to their 
optimal use in outpatient medical practice. I have been a practicing 
primary care physician for 25 years, and have used an EHR in my 
practice for the past 8 years. In addition to practicing medicine 
within a small practice located here on Capitol Hill, I also serve as 
the Medical Director for eHealth at MedStar Health, with the 
responsibility of determining and directing strategies for physicians 
regarding e-health applications in ambulatory care, which are oriented 
toward improving patient care and quality, and improving practice 
efficiency and efficacy. MedStar Health is a not-for-profit community 
healthcare system that includes seven hospitals in the Baltimore-
Washington corridor, including Georgetown University Hospital and the 
Washington Hospital Center. In addition, I represent the American 
College of Physicians within the Physicians' EHR Coalition (PEHRC); a 
coalition of twenty-one medical professional and specialty societies, 
dedicated to furthering the adoption and optimal use of electronic 
health records, and serve as the PEHRC's Co-Chair. Furthermore, I am 
the Co-Chair of the eHealth Initiative's Working Group for HIT in Small 
Practices. While my testimony is consistent with stated positions 
regarding EHR adoption and use of these organizations, I am here today 
testifying solely on my own behalf.
    By all accounts, I am an early adopter of electronic health 
records; having employed them in my practice since the mid-1990s. Since 
that time, the capabilities of EHR have advanced dramatically, as has 
our understanding of their value in medical practice. The initial 
impetus for my adoption of an EHR was a response to the pressures of 
managed care, which required primary care doctors like me to see more 
patients in less time, as well as produce and manage increasing amounts 
of paperwork. At that time, I saw the potential of EHR quite narrowly--
as an electronic filing cabinet--an administrative tool that would help 
relieve me of some of the paperwork burden and also allow for added 
productivity; something to automate care.
    Today, after years of using an electronic health record in my own 
practice, and years of working more broadly in the health information 
technology field, I believe the analogy of an EHR as electronic filing 
cabinet is not only inapt, but wrongheaded as well. Advanced EHRs are 
not and should not simply be about digitizing the information 
associated with existing care processes. In my view, that would do 
little more than digitize dysfunction. The real power of an EHR 
optimally integrated into practice is far greater. Properly 
implemented, an EHR can be a tool for better informing multiple care 
processes, and even lead to healthcare transformation, leading to 
further enhancements in quality, safety and efficiency, and efficacy.
    Having said that, it is important to put EHRs in perspective. They 
are a powerful healthcare technology, not a cure-all for the many 
challenges facing medicine today. Unless the adoption of an EHR is 
coupled to both significant process change (practice redesign) and 
payment reform that creates a sustainable business case for quality and 
care management, EHRs will not meet their promise.
    Properly implemented, EHRs can be the cornerstone of a redesigned 
twenty-first century healthcare system that harnesses information to 
empower patients and care providers and improve quality. The 
integration of EHRs into practice exponentially raises the value of 
information in the clinical process, enabling a fundamental 
transformation for doctor and patient. For physicians, EHRs bring 
advanced and actionable knowledge to the point-of-care, putting 
excellence in healthcare delivery within the reach of all doctors. For 
patients, EHRs enables true partnerships and collaborations with their 
healthcare team. The vision of a patient-centric healthcare system 
where quality, safety and efficiency are enabled by cutting-edge 
technology is a compelling one:

   Patients will be empowered and actively involved in their 
        care. They will collaborate with providers in decisionmaking 
        around care and have ready access to accurate and trusted 
        healthcare information, including their own medical histories, 
        disease-specific information and decision support tools for 
        self-care;

   Reliability and safety will increase because physicians will 
        practice evidence-based medicine, have access to knowledge and 
        information at the point of care, be guided by active decision 
        support tools and routinely communicate and cooperate with 
        other care providers;

   Care will move from episodic encounters to a continuous care 
        model where providers have access to patient data in context; 
        care is delivered proactively, chronic illnesses are monitored 
        by caregivers, patients are able to engage in informed self-
        care and duplication and waste are minimized; and

   Accountability for quality will increase. Quality will be 
        measured and the information shared with all stakeholders; and 
        quality care will be rewarded.

    While we are still a long way from realizing this vision (only 
about 10-15 percent of physicians are using EHRs in their office 
practices), the future is now in my own practice, and within 18-24 
months will also be in the practices of all of the clinicians at 
MedStar Physician Partners, a group of outpatient practices owned by 
MedStar Health. My colleagues and I use an advanced EHR that provides 
access to the full patient record--including all relevant clinical 
information such as diagnoses, immunizations, medications and test 
results, which is always available in a highly organized and 
contextually-appropriate format, improving the quality of our 
decisionmaking at the point of care. Computers are located in each of 
the exam rooms, making it easy to share information with patients and 
better include them in their own care decisions.
    For example, at the start of each visit, the patient is encouraged 
to look at his or her medication and allergy list and confirm its 
accuracy (see Figure 1). Patient educational materials are integrated 
into the system, and soon the EHR will provide clinical decision 
support for patients, which will allow them to make better decisions 
about self-care for chronic illnesses (see Figure 2). The EHR is also 
designed to link to new medical information, practice guidelines and 
even recent reference articles, dramatically shortening the time from 
discovery of new knowledge to its application into clinical practice. 
Our EHR is also integrated with electronic prescribing, further 
increasing safety and efficiency of prescribing (see Figures 3 and 4). 
And because the EHR is also available remotely, on-call physicians can 
view patient records and make care decisions based on the full context 
of a patient's clinical information anytime and anywhere.
    With our fully integrated EHRs, lab reports flow directly from 
reference and hospital labs securely into the patient record, showing 
up on the physician's PC for immediate review. This not only makes 
report review quicker--it also makes it better; new results can easily 
be viewed or graphed and interpreted in the context of prior results 
and the patient's full history. Even digital EKGs can be reviewed and 
compared with earlier tests.
    EHRs become more powerful when they use decision support tools that 
not only provide timely information, but also help clinicians turn that 
information into actionable knowledge. Active decision support tools 
are designed to connect key information such as a diagnosis with links, 
pop-ups, prompts and reminders that encourage discrete changes in 
patient management. While passive decision support puts key information 
in front of the clinician, active support links patient information, 
guidelines and best practices, and provides an immediate opportunity to 
take action. For example, in the case of a diabetic patient, an active 
decision support tool will trigger reminders about clinical management 
of diabetes such as an overdue test, even if the patient has made an 
appointment about a sinus infection (see Figure 5). Robust uses of 
decision support tools thus have the power to inform an episode of care 
(the visit for a sinus infection) into an opportunity to also include 
and optimize chronic care management (see Figures 6 and 7).
    But by far the greatest potential for an EHR to improve quality, 
efficiency, and efficacy comes from its use to transform care. The 
transformative uses of an EHR include integration of a registry for 
proactive care and population management (see Figure 8); integration 
with a secure patient portal or personal health record (see Figure 9) 
for appropriate use of non-face-to-face care or eCare; and use of the 
EHR to optimize team-based care or care coordination.
    EHR integration with a population or disease registry allows 
clinicians to proactively review subsets of patients and take 
affirmative steps to ensure adherence to nationally accepted best 
practices. For example, Washington Primary Care Physicians was recently 
recognized by the Delmarva Foundation, our regional Quality Improvement 
Organization, for its high rate of pneumonia vaccination in Medicare 
patients--a process made possible by our use of an EHR with patient 
registry functions. And when the arthritis medication Vioxx was 
recently recalled, all of our patients on the medication, among the 
25,000 in the practice, were identified within minutes and then 
contacted.
    What is critical to understand is that in order to fully harness 
the power of an EHR for transformation, the role of the physician and 
other caregivers in a medical practice must also change, from providers 
of discrete episodes of medical care, only when patients sense that 
they are sick or due for a particular service, to a more proactive 
model of chronic and ongoing care management. The care manager or 
coordinator, utilizing a patient-centric and physician-guided approach, 
would use an EHR and other health information technologies to create a 
medical home for all necessary information about his/her patients, 
focusing particularly on those with complex and chronic illnesses, and 
coordinating care between multiple specialists in order to optimize 
care, and to avoid conflicting treatment plans and duplicative tests.
    Why isn't this vision now a reality in every doctor's office? Much 
progress has been made in recent years in making EHRs better and more 
affordable. And I believe that we are on target to meeting the 
President's goal of universal EHR adoption by 2014. However, I also 
believe that this universal adoption and use of EHRs per se, will do 
little to making care better, safer, and more efficacious. To 
accomplish those goals will take more than placing a computer on a 
desktop; as discussed above, it will require using the EHR as a tool to 
inform and transform care and care processes. And EHRs that can inform 
and transform care are even more expensive; and more importantly, the 
more EHRs are used for informational and transformational purposes, the 
more negative the business case for the physician.
    Right now, the healthcare reimbursement system is designed to pay 
clinicians for procedures and episodic clinical care. Proactive care, 
care coordination, information management and eCare that lead to 
overall quality improvements and cost savings are generally not 
reimbursed. If as a matter of national policy, we want physicians not 
only to invest in EHRs, but also to use them in an optimal manner that 
will improve quality and safety, (that is as a care management tool, 
not just an electronic filing cabinet), we have to do more than mandate 
EHRs, and address what the Institute of Medicine has called our ``toxic 
payment system.''
    What does this look like to the average physician? Moving beyond 
the basic EHR to one that informs care, as mentioned above, adds 
thousands of dollars of cost, and by adding necessary time and 
complexity to each office visit (for chronically ill patients), reduces 
the number of patients that a physician can see each day. Adding an 
integrated registry implies that the clinician will intentionally take 
time out of the practice day to use the registry to manage patients who 
are not coming in when they should, or who are not at target treatment 
goals. And adding in eCare means that reimbursed office visits are 
substituted for free virtual care. While the use of a registry and 
eCare for some specialties would have little impact on daily practice; 
their optimal use by family physicians and internists could reduce 
their income to zero.
    Fortunately, pay-for-performance and pay-for quality initiatives 
recognize this problem, and seek to address it with a mix of financial 
incentives including support for the initial EHR investment as well as 
increased pay for adherence to quality performance measures, as well as 
reimbursement reform that pays for care coordination and eCare. My 
practice, for example, has recently been selected by CareFirst to serve 
as its first pilot site for the pay-for-performance Bridges to 
Excellence program, which will provide us with additional financial 
incentives for optimal use of our EHRs for care coordination and 
quality improvements--which by the way, is the only reason that we were 
able to afford the EHR enhancements I have been discussing. However, if 
we want EHRs to enable excellence globally, we have to move from pilots 
to policy reform.
    In conclusion, enormous progress has been made within the last few 
years in advancing the vision and reality of EHR use and interconnected 
electronic healthcare. The credit for this remarkable work belongs to 
many--within government and the private sector; and on both sides of 
the political aisle. As a practicing physician, I can personally attest 
to its value in my everyday practice. But as we get closer to realizing 
this vision of technology implementation for all clinicians, there 
remains a substantial risk that defining success as universal EHR 
adoption will actually do very little good for the American people. For 
success to be seen more broadly than IT adoption, and more 
appropriately as EHRs integrated into practice to both inform and 
transform care--fundamental changes must occur within payment and 
reimbursement policies. As advanced EHRs, combined with these 
enlightened incentives, will make care better, safer, and more 
effective, efficient, and equitable.



















        The MedStar eHealth Initiative report entitled, At A Tipping 
        Point: Transforming Medicine with Health Information 
        Technology--A Guide for Consumers, has been retained in 
        Committee files.

    Senator Ensign. Ms. Pure.

         STATEMENT OF PAMELA PURE, PRESIDENT, McKESSON 
   PROVIDER TECHNOLOGIES; EXECUTIVE VICE PRESIDENT, McKESSON 
                          CORPORATION

    Ms. Pure. Mr. Chairman, Senator Allen, I'm Pam Pure. I'm 
the Executive Vice President of McKesson Corporation. And I'm 
President of McKesson Provider Technologies, our healthcare 
information business.
    For over 170 years McKesson, a Fortune 15 Company, has led 
the industry in the delivery of medications and healthcare 
products. In addition, McKesson is the largest provider of 
healthcare IT. Our only business is healthcare. I have 
personally spent the last 20 years witnessing first hand the 
benefits of healthcare IT and the challenges associated with 
its adoption.
    For me this is not just a job, it's really a personal 
passion. Congress is considering numerous bills to promote 
healthcare IT and the President has outlined a bold vision to 
ensure every American has an electronic medical record. 
McKesson applauds these initiatives, but, to spur the adoption 
of healthcare technology, we really must start now, and we must 
start with proven technologies that can be deployed 
immediately.
    Technologies that will save lives, reduce errors, improve 
quality, and lower costs. And we can do this while we begin to 
develop the standards. Once the information is collected, we 
can share it in a safe and secure environment. What I would 
like to do is spend just a minute to describe three high impact 
technologies that can deliver great value to the American 
public, while providing a strong foundation for safe care.
    First, Bedside Bar-Code Scanning. All medications should be 
bar-coded and scanned at the bedside. When you think about it, 
it's really intolerable that people die every single day from 
medication errors that could easily be prevented with bar-code 
technology. Technology that exists at our grocery stores. 
Today, on average, 30 people touch a medication before it's 
actually administered, providing tremendous opportunity for 
missed hand-offs, and errors. Imagine the complexity for the 
nurse who typically administers 10 meds per patient, per day. 
Or the safety risk for a transplant patient who might receive 
36 different medications in a single shift. Imagine how quickly 
we could eliminate medication errors if a med was bar-coded and 
scanned.
    As a country, wouldn't it be great to have confidence that 
the right meds were being delivered to the right patient every 
single time? You know it's actually very simple. You can 
deliver meds like this, and, when it's candy, it doesn't matter 
if you pick a yellow M&M or a yellow Skittle, but, when it's 
medication, picking the wrong one can cost you your life. 
That's why we have to work like this: we have to use hand-held 
scanning, we have to insist on individual unit dose, bar code-
labeled meds that can be scanned at the bedside. Then it 
doesn't matter if the meds look alike, or if they sound alike. 
It's simple, if their scan doesn't match, the nurse doesn't 
administer the meds.
    You know, we looked at 75 hospitals that use McKesson bar-
code scanning technology everyday, and these numbers are 
actually quite staggering. These hospitals generate 400,000 
alerts weekly to warn nurses or other healthcare professionals 
that the wrong med or the incorrect dose is about to be 
administered. Each week, in these 75 hospitals, these systems 
prevent 56,000 medication errors. With the ability to reduce 
errors by up to 90 percent, imagine how many lives we could 
save if every hospital in the country simply started with bar-
code scanning? We have to get moving.
    The second high impact technology available today is 
electronic prescribing. It's simple; we have to eliminate the 
paper prescription. Each year, there are more than three 
million avoidable medication errors, in doctor's offices, or 
outpatient settings. Eighty percent of prescriptions are 
scribbled on paper today. Systems like McKesson's e-prescribing 
solutions check for drug allergies, they check for conflicts 
and they help to ensure that safe scripts are legible. There's 
no excuse; prescriptions must be electronic.
    Finally, we must provide physicians with secure access to 
patient information. We're talking about the basics. Today we 
provide healthcare in a paper world. In a world of blind 
encounters, where doctors give patients advice, place orders in 
the emergency room, and recommend treatment changes without any 
access to the patient's chart.
    Kind of crazy, at a time when you bank online, book your 
travel online, purchase gifts on the computer, but your 
healthcare record is still on paper. McKesson gives doctors and 
nurses immediate electronic access to essential patient 
information securely with just one click of a mouse. Each 
month, we have users logging onto our physician portal 1.8 
million times, so clearly the technology is ready. Our 
challenge is accelerating adoption. You know there are 
innovative health institutions across the country using 
technology to provide safer care. They are saving lives, and 
saving money. But, you know, it's just not happening fast 
enough. We must accelerate the adoption of these basic 
technologies. I would ask the two of you, would you choose a 
bank that didn't offer an ATM? Should you choose a hospital 
that doesn't provide bar-code scanning of medications? You 
know, the biggest obstacle to rapid adoption is the lack of 
funding. The Federal Government can play a key role by 
providing financial incentives. One creative option would be 
government-sponsored entities that would provide government-
backed loans for healthcare providers so they could get started 
and buy these solutions.
    If you combine financial and pay-for-performance 
incentives, I believe you will spur rapid adoption. Ten people 
die from medical errors every hour in the United States. As a 
Nation, we have a moral responsibility to do better. We have a 
moral responsibility to save these lives, and as a country we 
must adopt and use these proven technologies today.
    Let me reiterate the critical steps toward automation. One, 
medications must be bar-coded and scanned at the bedside. Two, 
all prescriptions must be electronic; no more illegible paper. 
And, three, doctors and nurses must have access to patient 
information before critical decisions are made. As a Nation we 
now have the will and the means to make healthcare safer. We 
can leave a remarkable legacy. Thank you. I would be happy to 
answer any questions.
    [The prepared statement of Ms. Pure follows:]

    Prepared Statement of Pamela Pure, President, McKesson Provider 
      Technologies, Executive Vice President, McKesson Corporation

    My name is Pamela Pure, and I am the Executive Vice President of 
McKesson Corporation and President of McKesson Provider Technologies, 
the company's health information technology business. I thank Chairman 
Ensign, Ranking Member Kerry, and the Members of the Subcommittee for 
the opportunity to submit testimony on behalf of McKesson. McKesson 
strongly supports the goal of improving healthcare quality by using 
healthcare information technology (IT) to reduce medical errors and 
lower costs.
    For more than 170 years, McKesson has led the industry in the 
wholesale delivery of medicines and healthcare products. Today a 
Fortune 15 corporation, McKesson delivers vital pharmaceuticals, 
medical supplies, and healthcare IT solutions that touch the lives of 
more than 100 million patients each day in every healthcare setting. As 
the world's largest healthcare services company with a customer base 
that includes more than 200,000 physicians, 25,000 retail pharmacies, 
5,000 hospitals and 600 payers, McKesson is well positioned to help 
transform the healthcare system.
    As the largest provider of automation and information technology in 
the healthcare industry, we deliver innovative technologies at each 
point in the healthcare system to reduce medication errors, lower 
costs, and improve the quality and efficiency of healthcare. We are 
dedicated to making healthcare safer, a goal that requires a deep 
understanding of healthcare delivery processes and a clear focus on 
what is required by key stakeholders such as physicians, nurses, 
pharmacists, and patients. My colleagues and peers know that for me 
this is not a job; it is a passion. After 20 years of advocating the 
use of technology and witnessing first-hand the benefits and challenges 
associated with its implementation, I am delighted to have this 
opportunity to share my insights with the Congress.
    McKesson fully supports the President's goal that every American 
should have an electronic health record (EHR) in 10 years. To meet this 
bold vision, McKesson believes that the Federal Government should 
pursue a two-pronged strategy to spur the adoption of automation and 
healthcare IT. First, we need broad deployment today of high-impact 
technologies that provide unquestionable benefits in the delivery of 
healthcare. Second, on a parallel track, we need to develop the 
standards and promote the interoperability of systems that are 
essential for medical information to be shared among healthcare 
providers, patients, and public health agencies in a safe, secure 
manner.
    At McKesson, we know that technology itself is not the inhibitor of 
change in the healthcare system. The technology is available and 
working. It is intolerable that people die every day from medication 
errors that could be prevented with bar-code technology, the same 
technology that is used in every major retail outlet in this country. 
We conduct sophisticated banking and other business transactions 
electronically across continents; yet most physicians in the United 
States still rely on their memories for complex medical information, 
and write orders using pen and paper.
    While deployment of healthcare IT is growing, less than 20 percent 
of hospitals in the United States today use bar-codes to verify the 
administration of patient medications, and fewer than 10 percent of 
physicians in hospitals enter patient prescriptions and medical orders 
electronically. The numbers are only slightly better outside the 
hospital: only about 25 percent of large physician offices enter their 
prescriptions electronically. The number drops considerably for small 
physician practices.

Three Areas Where High-Value, High-Impact Technologies Already Make a 
        Difference
    We can and must make the healthcare system safer and more efficient 
by accelerating the use of technology in all hospitals and physicians' 
offices in the United States. There are three areas where high-value, 
high-impact technologies already make a significant difference:

        1. Bar-code technology. Medications should be packaged in unit-
        doses labeled with bar codes and scanned at the bedside before 
        they are given to patients. Today, on average, there are 27 
        steps in the medication use process that involve many 
        decisions, multiple hand-offs and various people, ranging from 
        the physician who prescribes the order to the pharmacy staff to 
        the nurse who ultimately administers the medication to the 
        patient. Healthcare IT and automation can reduce the hand-offs 
        and eliminate, on average, 40 percent of the steps with 
        dramatically improved accuracy, efficiency and safety. In a 
        group of 75 hospitals that use McKesson's bedside bar-coding 
        technology, 400,000 ``alerts'' are triggered weekly to nurses 
        or other healthcare professionals to advise them that the wrong 
        medication or incorrect dosage is about to be administered. As 
        a result of these on-line warnings, we estimate that these 
        hospitals prevent 56,000 errors each week; a staggering 
        statistic! Hospitals that deploy bar-code scanning technology 
        report dramatic error reduction in medication administration, 
        as high as 90 percent.

        2. Electronic prescriptions. We must eliminate paper 
        prescriptions. Each year more than three million preventable 
        adverse drug events occur in physicians' offices or other out-
        patient care settings. Imagine a world where a patient's list 
        of current medications is available to the physician and the 
        physician can order initial scripts or refill them online. All 
        the medication names would be legible, and all orders checked 
        for drug-drug interactions and allergies. Today, McKesson's 
        systems help to ensure safe prescriptions are written and 
        filled 100,000 times each month, but, nationwide, 80 percent of 
        prescriptions are still on paper, and many are illegible.

        3. Secure web-based access to patient information. We must 
        equip physicians and clinicians with the information needed to 
        make informed decisions about patient care. Today, most 
        healthcare is delivered in a paper-based world. It is not 
        uncommon for physicians to provide patients with advice, give 
        directions to other staff and recommend treatment changes 
        without any access to a patient's chart. These blind encounters 
        happen every day. Secure web-based access to clinical patient 
        information, such as laboratory results, the patient's medical 
        record and diagnostic images, enables physicians to find, 
        within seconds, the information they need to make more informed 
        decisions and initiate or adjust treatment. McKesson currently 
        records 1.8 million logins each month to its web-based 
        physician portal, almost double compared to a year ago. Remote 
        access via web-portal technology is in common use across many 
        industries; yet, in healthcare, its deployment is only in the 
        50-60 percent range.

    Funding to support these focused initiatives can lead to dramatic 
progress very quickly. McKesson applauds the leadership shown and 
initiatives undertaken by the Congress and this Administration. 
Implementing these three forms of technology will build the required 
momentum and provider support for adoption of healthcare IT.

Technology Is Improving Healthcare Quality Today
    Healthcare technologies today save lives, reduce medical errors, 
improve the quality of care, and reduce overall health costs. The 
following healthcare organizations are just a few of our customers that 
have taken these important first steps to improve care for their 
patients:
    Concord Hospital, an affiliate of Capital Region Health Care 
(CRHC), Concord, NH: Concord was one of the first hospitals in the 
United States to introduce bedside bar-code scanning of medications in 
1994, which reduced its already low medication error rate by 80 
percent. This reduced error rate, which has been sustained for more 
than 10 years, has improved productivity and efficiency as well as 
increased clinician satisfaction and retention.
    Medical Associates Clinic, Dubuque, IA: Medical Associates is 
deploying an ambulatory electronic health record and e-prescribing 
system for more than 100 physicians and medical providers, which 
represent 30 specialties dispersed across 16 locations in three states. 
With the implementation still underway, physicians are already entering 
26,000 e-prescriptions each month, and patient information is available 
electronically regardless of location. Nurses spend far less time on 
medication management; they have reduced the time spent on paper 
charting activities by 24 percent, and they spend 16 percent more time 
with patients and their families. In addition to improved quality and 
better decisionmaking, this clinic projects an annualized net gain of 
$1.7 million with full system deployment.
    Regional West Medical Center, Scottsbluff, NE: A regional referral 
center covering more than 12,000 square miles in rural Nebraska, 
Regional West has used information technology to streamline the 
delivery of healthcare. Through secure Internet access, physicians and 
other clinicians can view a single electronic medical record for each 
patient, which includes diagnostic medical images, pharmacy data and 
laboratory results. A McKesson pharmacy robot dispenses bar-coded, 
unit-dose medication packets virtually error-free. Electronic patient 
charting at the bedside has cut nurses' daily paperwork by nearly 1.5 
hours, enabling them to spend more time caring for patients. The 
hospital has reduced its medication error rate by 30 percent to less 
than 1 percent. Before giving a medication, the nurse must capture a 
three-way bar-code match between his/her badge, the medication and the 
patient's wristband to check the five ``rights'': the right patient is 
receiving the right dose of the right medication at the right time via 
the right route.
    Mary Lanning Memorial Hospital, Hastings, NE: The largest employer 
in Hastings, Nebraska, Mary Lanning Memorial Hospital has served the 
healthcare needs of the surrounding community for the past 83 years. 
Although the hospital's medication error rate was low, a single tragic 
event highlighted the need for standardized medication administration. 
Bedside bar-code scanning technology was implemented along with a 
pharmacy information system to reduce the risk of medication errors. 
Additionally, medications scanned at the bedside are compared to orders 
reviewed by pharmacists and screened for allergies, interactions and 
therapeutic duplications. Preliminary data has shown a 35 percent 
increase in the reporting of near-miss events related to wrong drug and 
wrong patient.
    Presbyterian Healthcare Services in Albuquerque, NM: Using 
McKesson's bar-code technology solutions, Presbyterian reduced 
medication administration errors by 80 percent. Technology has also 
allowed pharmacists to be redeployed to critical care units to work 
directly with patients and physicians and enhance the quality of care.
    These innovative health systems and others across the country are 
saving lives and saving money. Physicians, nurses, and pharmacists now 
spend more time interacting with patients and less time performing 
administrative functions. More importantly, these organizations are 
creating a new baseline for patient care in the United States. While 
making healthcare safer through seamless, rapid and accurate 
information flow, they are also addressing one-third of healthcare's 
overall costs: administrative paperwork, clinical errors, manual hand-
offs and re-work.

Developing Standards and Promoting Interoperability
    McKesson fully supports efforts of Congress and the Administration 
to facilitate standards harmonization, encourage the formation of 
regional health information organizations and establish a National 
Health Information Network. Development of the requisite technology 
standards will allow the computer systems of doctors, hospitals, 
laboratories, pharmacists and payers to efficiently communicate and 
share information. We are honored to work with Dr. David Brailer and 
the Office of the National Coordinator for Health Information 
Technology as he moves to create a foundation for the transformation of 
our healthcare system. We are also pleased to be a member of the 
Commission for the Certification of Health Information Technology, a 
collaborative public-private partnership to develop standards and 
certify health information technology systems.
    We all remember the incremental steps that were taken by other 
industries as they moved toward connectivity and interoperability. 
First, they automated individually and then, collectively, they 
collaborated to connect the information. Consider the banking industry. 
A full decade elapsed between the early proliferation of bank-specific 
automatic teller machines (ATM) and the formation of ``shared ATM 
networks'' in the 1980s. Once the automation was complete, connectivity 
and interoperability occurred very quickly. In the interim, banks were 
able to realize the cost and efficiency savings of ATMs, and consumers, 
appreciating the convenience of ATMs, quickly adapted to this new 
banking system. Connectivity is a natural evolution of automation. We 
are confident the same evolution will happen in healthcare. Once our 
Nation's healthcare providers are fully automated, it will be possible 
to connect previously isolated healthcare systems.

Understanding and Overcoming Barriers to Rapid Adoption of Health 
        Technology
    The biggest obstacle to healthcare information technology adoption 
is securing the needed funding and resources. Today, physician 
practices and hospitals do not have access to the capital necessary to 
invest in their own technology or, on a larger scale, to fund 
connectivity.
    The Federal Government can play a key role in financing this 
healthcare transformation through creative funding arrangements. One 
option is through the creation of government sponsored entities, which 
would provide indirect Federal support through guaranteed loans for 
healthcare providers to purchase, adopt, and implement proven health 
technology solutions that are focused on error elimination and safety. 
Coupled with the pay-for-performance initiatives that reward providers 
for the quality of healthcare delivered rather than for services 
rendered, guaranteed loans or other financial incentives will spur 
technology adoption.
    A combination of financial and performance incentives would help 
mitigate the initial expense of technology implementation. The 
reduction in medication errors and improved efficiencies in delivering 
improved healthcare will also provide a return on investment for 
healthcare organizations, thereby enabling them to repay the loans.
Conclusion
    McKesson believes our healthcare system must adopt and deploy 
proven technologies today that reduce medical errors in order to save 
lives, improve the quality of care, and reduce costs. These initial 
steps should include:

        1. Implementation of bedside bar-coded medication 
        administration systems across the United States.

        2. Elimination of paper prescriptions through use of e-
        prescribing in physicians' offices.

        3. Secure, online, ``anytime, anywhere'' access for physicians 
        to critical patient information.

    Automated information will enable our healthcare organizations to 
store and collect patient data, which will ultimately lead to a 
comprehensive electronic health record. Concurrently, we need to adopt 
the standards necessary to ensure interoperability among systems that 
will facilitate communication within our health system. If we execute 
these initiatives simultaneously, McKesson strongly believes that this 
Congress and this Administration will be able to deliver visible and 
measurable results with a lasting impact on the quality of healthcare 
for the American public.
    As a Nation, we have both the will and the means to transform 
healthcare for the better. This will be a remarkable legacy, and one we 
should act on today.
    Mr. Chairman and members of the Subcommittee, thank you for your 
interest in this important subject. I will be happy to answer any 
questions.

          STATEMENT OF KAREN IGNAGNI, PRESIDENT/CEO, 
                AMERICA'S HEALTH INSURANCE PLANS

    Ms. Ignagni. Thank you Mr. Chairman, our testimony this 
morning is focused on four areas. First, the opportunity to 
deploy health information technology, and the role that our 
members are playing in this regard. Second, the importance of 
making a system consumer centric and we haven't talked about 
that very much this morning, we've talked more about the 
provider aspects of it. I would like to speak to the consumer 
centric aspects. And then finally key policy issues. And I 
appreciate the opportunity to make some recommendations.
    First on the opportunity, there has been much discussion 
about the fragmentation in our system. And what a deleterious 
effect it has had. But I think there has been little focus on a 
very important piece of information. That is that the Rand 
Corporation in 2003 determined that only 55 percent of what is 
done in healthcare is best practice. We wouldn't tolerate that 
standard in any kind of a manufacturing situation, whether it 
be auto, computers, or anything of that sort in our society, so 
it is a matter of prioritizing productivity increases in 
healthcare technology. And we're glad to be able to provide 
some recommendations on how to do that this morning.
    It is not simply the technology itself, it is the 
application of the technology. So you are on the precipice of 
an important decision, an important issue. Are we talking about 
adopting technology for the sake of adopting technology? Or are 
we going to marry that with quality performance and 
improvement? We think that it should be the latter not the 
former. We're pleased to provide a great deal of evidence about 
the role that our members are playing, we've appended it to our 
testimony, and I would be delighted to talk about that 
specifically.
    There are five areas that we pointed out. First, our 
members are in the front lines of rewarding quality, beginning 
to align payment with performance, and working collaboratively 
with physicians to do that, and hospitals as well. We've talked 
about measuring performance. We're proud to be part of the AQA, 
the Ambulatory Quality Alliance, which is a ground-breaking 
initiative that leverages technology to develop a uniform, 
coordinated strategy for measuring, aggregating and reporting 
clinical performance. We think this type of collaborative 
offers a road map for the kind of collaboration necessary to 
develop uniform standards we've been talking about, and indeed 
we're going to be offering some specific recommendations in 
that regard.
    Electronic prescribing, we've been on the front lines of 
this issue and we've offered very specific evidence of that. 
Homeland Security, we've been working closely with the Centers 
for Disease Control because our members have developed the 
capability to identify illness patterns that might represent 
the initial warning signs of a bio-terrorism event. Oftentimes, 
individuals call nurse advice lines in the health plan before 
they actually begin to show up in the hospital emergency rings.
    And finally we've provided evidence of various 
collaborations among our members including the CORE project 
which is a group of our health plans under the Council for 
Affordable Quality Healthcare, working on standards such as the 
banking industry has done to create operating rules that 
facilitate real transfer--real-time transfer of information.
    Despite all this progress we know that more needs to be 
done, so that's why our board of directors is embarking on an 
initiative aimed to develop uniform approaches to personal 
healthcare records. We're delighted that this conversation 
about health information technology is beginning to evolve. 
Earlier on, the focus had been on regional health 
organizations, on only electronic health records, or EMRs. Now 
it's important, we believe, to look at the full continuum, to 
look at the national standards, to look at personal health 
records, how they are married with the EMR, the EHR, and begin 
to talk about what is the appropriate thing from the patient 
perspective.
    We provided a little chart which compares a personal health 
record to an electronic health record system to easily 
distinguish one from the other. The goal here is to create, in 
our view, a personal health record that can be complimented and 
fully compatible with the electronic health record, so it's not 
either/or, and we're pleased that the conversation is being 
enlarged so we can provide an opportunity to move the 
advancement of the technology, as well as the opportunity for 
consumers to receive the best care in every setting they're 
involved in.
    If we only focus on the electronic health record, 
electronic medical record and often the two are used 
interchangeably, then we're likely to miss the opportunity for 
an individual who may get some services, at Georgetown 
Hospital, or GW, or Hopkins, while getting other services at 
Holy Cross, Reston Hospital. So if we continue to look in a 
silo only from an institutional perspective, we miss the 
opportunity to leverage what physicians can do when they're 
confronting patients who are ill. They need to have the full 
picture.
    In terms of the policy issues we think that they're five 
that we hope that the Committee takes up, and we're happy and 
encouraged at this bipartisan examination of these matters. 
First the uniform standards. Everyone has talked about the 
importance of uniform standards. We agree with that, we've been 
concerned in the past that the discussion was overly reliant on 
regional health information organizations, in the absence of 
uniform standards approach. And we were concerned that it would 
result in an isolated island of information systems.
    Privacy and security in terms of what you can do, we would 
strongly urge you to consider preemption so that we can have a 
national standard with respect to privacy and security and not 
have barriers for the exchange of information. Financing, we 
think public and private efforts are warranted. And the Federal 
Government can compliment private sector investment. But on 
this question we believe it would be a mistake to relax Federal 
fraud and abuse laws for the purpose of allowing hospitals to 
support physician use of health information technology.
    We're concerned about unintended consequences in light of a 
recent Federal Trade Commission report, talking about the 
impact of consolidation in healthcare, and how it has related 
to rising healthcare costs. So we would hope that the Congress 
would ask for the opinion of the FTC, or to consider moving 
forward in this direction. We talked about AHRQ funding as my 
colleagues have, and we haven't talked about this morning about 
liability of reform. When we're talking about large ticket 
items in terms of improving healthcare when we're going to a 
situation where $100 billion is being added to the system every 
year for defensive medicine. Surely that should be an important 
part of the considerations.
    Mr. Chairman, we thank you for the opportunity, and we look 
forward to engaging in the question and answer period.
    [The prepared statement of Ms. Ignagni follows:]

          Prepared Statement of Karen Ignagni, President/CEO, 
                    America's Health Insurance Plans

I. Introduction
    Good morning, Mr. Chairman and members of the Subcommittee. I am 
Karen Ignagni, President and CEO of America's Health Insurance Plans 
(AHIP), which is the national trade association representing nearly 
1,300 health insurance plans providing coverage to more than 200 
million Americans. Our members offer a broad range of products in the 
marketplace and also have demonstrated a strong commitment to 
participation in public programs.
    We appreciate this opportunity to testify about the role health 
information technology can play in improving the delivery and quality 
of health care. We applaud Congress and the Administration for 
prioritizing this issue. It is encouraging to see Members of Congress 
addressing this priority on a bipartisan basis, and we thank you for 
the opportunity to discuss the positive contributions our members are 
making in this area.
    Our members are strongly committed to advancing an interconnected 
health care system in which health information can be exchanged 
electronically to empower individual consumers and clinicians to make 
better health care decisions and, at the same time, to improve quality, 
value, and efficiency throughout the U.S. health care system.
    Our testimony today will focus on six areas:

   Opportunities to deploy health information technology to 
        improve quality, value and efficiency for health care 
        consumers;

   The role health insurance plans are playing in advancing 
        health information technology;

   Specific health information technology initiatives 
        implemented by AHIP member companies;

   The importance of personal health records (PHRs) in an 
        interconnected health care system;

   Keys to the successful implementation of health information 
        technology; and

   Our concerns about certain policy issues imbedded in pending 
        legislation to expand health information technology.

II. Opportunities To Improve Quality, Value, and Efficiency
    In the U.S. health care system, the organization and management of 
personalized health information have not always kept pace with the 
advancement of modern medicine. Personal health information is often 
fragmented and incomplete, and can result in unnecessary and 
preventable medical errors, inappropriate care, and duplication of 
services--all contributing to rising health care costs and missed 
opportunities to improve patient care.
    At the same time, variation in medical decision-making has led to 
disparities in the quality and safety of care delivered to Americans. A 
1999 report \1\ by the Institute of Medicine (IOM), found that medical 
errors could result in as many as 98,000 deaths annually, and a 2003 
RAND study \2\ found that patients received only 55 percent of 
recommended care for their medical conditions. A wide range of 
additional studies indicate that Americans frequently receive 
inappropriate care in a variety of settings and for many different 
medical procedures, tests, and treatments. Such inappropriate care 
includes the overuse, underuse or misuse of medical services. Studies 
also show that patterns of medical care vary widely from one location 
to another, even among contiguous areas and within a single 
metropolitan area--with no association between higher intensity care 
and better outcomes.
---------------------------------------------------------------------------
    \1\ ``To Err is Human,'' Institute of Medicine, 1999.
    \2\ ``The Quality of Health Care Delivered to Adults in the United 
States,'' Elizabeth A. McGlynn, RAND, June 25, 2003.
---------------------------------------------------------------------------
    The widespread practice of defensive medicine to minimize the 
threat of litigation is another factor contributing to inappropriate 
care and higher costs. According to a study recently published in the 
Journal of the American Medical Association, \3\ 93 percent of 
specialty physicians reported that they engage in defensive medicine. 
When asked about their most recent act of defensive medicine, 43 
percent reported using imaging technology in clinically unnecessary 
circumstances.
---------------------------------------------------------------------------
    \3\ ``Defensive Medicine Among High-Risk Specialist Physicians in a 
Volatile Malpractice Environment,'' Journal of the American Medical 
Association, June 1, 2005.
---------------------------------------------------------------------------
    To meet these challenges, it is critically important for the public 
and private sectors to work together to develop an interconnected 
health care system that provides consumers and clinicians with access, 
through PHRs, to a history of each individual's health information 
wherever and whenever it is needed. Doing so will yield benefits for 
consumers and other stakeholders on several levels:

   Meaningful information will be available to patients and 
        providers in a usable form and in a timely fashion to improve 
        the overall safety, effectiveness, and efficiency of an 
        individual's care;

   Wasteful and duplicative care will be reduced. A well-
        coordinated health care system will remove the need or 
        justification for repeating or performing unmerited 
        interventions;

   Increased transparency in the health care system will allow 
        for a meaningful comparison of health outcomes and resources 
        expended;

   The latest advances in evidence-based medical practices will 
        be disseminated broadly and rapidly;

   Consumers and purchasers will benefit from a system that 
        deploys resources more efficiently and effectively;

   Clinicians will be able to increase their productivity when 
        they have the complete picture of a patient's health care, 
        including services received from other caregivers; and

   Quality performance will be rewarded.

Cost Savings
    While it is difficult to predict the cost savings that will be 
achieved through health information technology, a number of studies 
suggest that the savings will be significant. In a January 2005 study 
published by Health Affairs, \4\ the Center for Information Technology 
Leadership (CITL) estimated that implementation of an interconnected 
and fully standardized health care system would yield $77.8 billion in 
annual savings. This study focused specifically on the benefits of a 
system in which hospitals and medical groups can exchange information 
electronically, using uniform standards on a nationwide basis, with 
five key stakeholders: payers; pharmacies; public health departments; 
radiology centers; and independent laboratories.
---------------------------------------------------------------------------
    \4\ ``The Value of Health Care Information Exchange and 
Interoperability,'' Health Affairs, January 19, 2005.
---------------------------------------------------------------------------
    Separately, the Government Accountability Office (GAO) issued a 
report \5\ in October 2003 on the cost savings achieved through health 
information technology. The GAO found that one health insurance plan, 
Blue Cross and Blue Shield of Alabama, reduced its data entry costs by 
$20 million annually by applying health information technology to its 
claims processing functions. The GAO reported that health insurance 
plans also achieved other benefits including ``increased staff 
productivity, improved timeliness in processing claims, improved 
customer satisfaction, and improved clinical care to members.''
---------------------------------------------------------------------------
    \5\ ``Information Technology Benefits Realized for Selected Health 
Care Functions,'' Government Accountability Office, October 2003.
---------------------------------------------------------------------------
III. Role of Health Insurance Plans

Quality-Based Programs
    AHIP's member companies are on the front lines of developing 
information technology systems to improve health care quality and 
administrative efficiencies.
    Health insurance plans have a strong track record of using health 
information technology to implement programs that reward providers for 
quality performance. Health insurance plans have instituted a range of 
provider payment arrangements--often referred to as pay-for-performance 
programs--that are promoting high quality and efficiency throughout the 
U.S. health care system. Our members' experiences clearly indicate that 
paying for quality is a promising strategy for improving overall 
wellness and advancing evidence-based medicine, which translates into 
better health outcomes and greater value for employers and consumers.
    Some quality-based payment programs provide financial awards to 
physicians in the form of increased payments, while others offer non-
financial rewards in the form of public recognition, preferential 
marketing or streamlined administrative procedures. Additionally, some 
plans are offering consumers reduced co-payments, deductibles, and/or 
premiums in exchange for using providers deemed to be of higher 
quality, based on specific performance measures. In all of these 
programs, health information technology plays a role in collecting data 
to evaluate the performance of health care providers and determining 
the extent to which they are achieving desired goals.

Collaboration Through the AQA
    A critically important step in moving forward with programs that 
reward quality performance is the development of a uniform, coordinated 
strategy for measuring, aggregating and reporting clinical performance. 
To address this challenge, AHIP has been working with the American 
Academy of Family Physicians (AAFP), the American College of Physicians 
(ACP), other medical specialty organizations, the Agency for Healthcare 
Research and Quality (AHRQ), consumers, and employers.
    This collaborative effort--called the Ambulatory Care Quality 
Alliance (AQA)--recently reached a consensus on a common set of 26 
ambulatory care performance measures that are intended to serve as a 
``starter set'' that will provide clinicians, consumers, and purchasers 
with a set of quality indicators that can be used for quality 
improvement, public reporting, and pay-for-performance programs. This 
starter set will be expanded in a multi-phase process, resulting in a 
more complete set of measures to address a wide range of additional 
quality indicators addressing efficiency, patient experience, sub-
specialties and other key areas.
    In addition, the AQA is developing strategies for uniform data 
aggregation and for reporting reliable and useful quality information 
to consumers, providers and other stakeholders. The AQA recently 
developed two sets of fundamental principles for reporting. The first 
set of principles, which addresses reporting to consumers and 
purchasers, aims to facilitate more informed decision-making about 
health care treatments and investment. The second set of principles, 
which addresses reporting to physicians and hospitals, is designed to 
facilitate quality improvement and to inform providers of their 
performance.
    The AQA will continue to move forward in the areas of measurement, 
data aggregation and reporting, and encouraging additional key 
stakeholders to become involved in this important effort to improve 
health care quality and patient safety. The dissemination of 
information derived from aggregated performance data ultimately will 
yield benefits on several levels. Consumers will be able to make more 
informed decisions about their health care treatments. Physicians, 
hospitals and other health care professionals will be better able to 
improve the quality of care they provide. Purchasers will receive 
greater value for their investment in health care benefits. Health 
insurance plans will continue to develop innovative products that meet 
consumer and purchaser needs.

Electronic Prescribing
    Electronic prescribing--a key element of the overall strategy for 
interconnectivity--is another area where health insurance plans are 
making significant contributions.
    Many of AHIP's members use web portals to give individual members 
access to their pharmacy-related personal information, including 
pharmacy claims, benefits information, up-to-date formulary listings, 
and online search tools to find participating pharmacies. Some health 
insurance plans also allow members to fill or refill prescriptions 
online, send questions electronically to a pharmacist about their 
medications, and purchase over-the-counter medications online at 
discounted prices. Others are working with health care providers to 
incorporate health information technology into practice settings--in 
some cases through personal computers and handheld devices for patient 
order entry and electronic prescribing.
    These programs demonstrate our members' strong commitment to the 
development of electronic prescribing technologies at the point-of-
patient-care.

Public Health Surveillance
    The unique capabilities of health insurance plans also are 
evidenced by their active involvement in the development of early 
warning health surveillance systems. Following the events of September 
11, 2001, a number of AHIP member companies collaborated with the 
Centers for Disease Control and Prevention (CDC) to develop a 
demonstration program to identify illness patterns that might represent 
the initial warnings of a bio-terrorism event.
    This demonstration program includes a rapid response capability to 
identify unusual clusters of symptoms or illness from daily encounters, 
to alert public health officials about these clusters, and to 
facilitate the ability of public health officials to obtain detailed 
clinical information about specific cases when needed. Health insurance 
plans report only aggregate de-identified data to the surveillance 
system, thus providing maximum protection of patient confidentiality. 
In cases where unusual clusters are identified, the state or local 
public health team will work with clinicians to decide if additional 
information is needed.
    By arming public health officials with real-time data on clusters 
of emerging symptoms and illnesses, health insurance plans have 
established themselves as an important part of an advanced disease 
surveillance system to help protect our Nation from emerging infectious 
diseases and potential bio-terrorism agents. This is possible because 
our members have a unique set of skills and competencies based on their 
integrated care coordination systems, large defined populations, and 
comprehensive data sets. These same assets will enable health insurance 
plans to play a central role in helping the Nation transition to an 
interconnected health care system.

Initiatives By AHIP Member Companies
    To provide a better understanding of health information technology 
initiatives developed by our members, we are attaching an appendix that 
provides brief examples of some of the programs being implemented 
across the country. We are providing these summaries to give the 
Committee a better understanding of the depth and breadth of 
initiatives that are being adopted.

IV. Personal Health Records (PHRs) as the Cornerstone of an 
        Interconnected Health Care System
    Our members' vision for an interconnected health care system 
involves the creation of a PHR that contains information key to the 
safety, effectiveness, and efficiency of an individual's care, and will 
be linked to and fully compatible with electronic health records (EHRs) 
initiated by health care institutions or clinicians.
    The delivery of health care requires three basic inputs as 
illustrated by the diagram below:




   the individual, with his or her personal history, needs, and 
        preferences;

   the clinician with the knowledge, skills, and experience 
        necessary for the evaluation and treatment; and

   facilities and other resources necessary for care to be 
        conducted, such as a radiology department or an ER.

    As the Committee is aware, an individual's encounters with the 
health care system may consist of a family practitioner, a specialist 
who deals with heart disease, a physiotherapy service at a local 
clinic, and a local pharmacist. Some relationships between an 
individual and the health care system may be episodic, such as a visit 
to the emergency room; others may endure for many years. A healthy 
individual will have only infrequent health encounters. By contrast, a 
person with multiple chronic diseases will have numerous complex 
relationships and encounters with the health care system that span 
multiple institutions and physicians. Some relationships will arise as 
part of a prescribed treatment, while others will be ad hoc or 
consumer-initiated.
    What is certain is that individual relationships and encounters 
with the health care system are becoming more complex and diverse with 
growing rates of chronic disease, an aging population, and greater 
consumer choice. Each health care event may result in a diagnosis or 
treatment that has widespread and enduring significance for an 
individual's future care and overall health. The information that 
populates a personal health record (PHR) comes from these events. 
AHIP's Board of Directors has launched an effort that is designed to 
result in each consumer having a PHR containing information about their 
health and their care, based on key information from health plan-based 
claims management systems, other health plan administrative data, and 
in some cases data from health care provider-based EHR systems. The 
goal is to integrate information from all sources to create a coherent 
and useful understanding of the individual's overall care. The 
information in a PHR should be owned by the individual and maintained 
securely and confidentially on their behalf.
    The PHR will be complemented by EHRs, which are more than a record 
of care. An EHR focuses on the details of care ``processes'' within a 
hospital, a doctor's office, or other care setting. It is required to 
manage information that is as much about the professionals, the 
organization, and medicine in general, as it is about the individual 
patient. These two characteristics--the comprehensive support for tasks 
and the recording of information about the provision of care--mean that 
an EHR is a strong reflection of the particular institutional context 
and the clinical services it supports. The EHR represents not only 
patient information, but information for medical and/or legal uses by 
the institution--the EHR is designed to someday become the legal and 
permanent institutional health record regarding the care of a patient.
    It is vital to understand that PHR and EHR systems are not 
alternatives. They are complementary, work together, and together 
achieve the goal of both managing the overall care of the individual 
and managing the delivery of health care services that are required to 
have an interconnected and electronic health care system. The diagram 
below illustrates the separate roles of PHRs and EHRs:



    The PHR has the potential to influence both the resourcing side of 
the health care system and the delivery of individual care. The prime 
purpose of the PHR is to ensure that the information most valuable for 
the overall quality and efficiency of the individual's care is 
available wherever and whenever it is needed. The PHR links together 
and coordinates an individual's many health encounters.

V. Keys to Successful Implementation of Health Information Technology
    To accomplish the successful development of an interconnected 
health care system, it is important for the public and private sectors 
to work together to address a number of priority issues. These include 
creating national, uniform interoperability standards; assuring the 
privacy and security of health information; and financing the adoption 
of health information technology.

Uniform Standards and a National Framework
    AHIP supports the creation of voluntary, national, uniform 
interoperability standards that facilitate the interconnectivity of 
health information systems. It is widely recognized that the 
development of an interconnected health care system that improves 
health care quality and efficiency is dependent on the creation and 
adoption of such standards. We believe that the Federal Government and 
the private sector, working together, can implement uniform standards 
and operating rules to facilitate the exchange of information and make 
the process transparent, without stifling innovation.
    AHIP and our members are looking forward to being active 
participants in this process. We intend to launch an effort to involve 
a diverse group of key stakeholders in developing common standards and 
core content areas for PHRs that take into account issues of importance 
to consumers, providers, and purchasers. At the same time, we encourage 
HHS to pursue a similar process for EHRs.
    Uniform, consensus-driven standards will bring together different 
health information technology systems into a National Health 
Information Network by specifying common data formats, communication 
protocols, and operating rules. Government and private stakeholders 
need to work cooperatively through the existing standards development 
organization process to create and maintain standards and push them 
into the marketplace. Such standards should be designed through an open 
model that allows sufficient flexibility to be adopted by various 
organizations in diverse and changing environments. The AQA's work on a 
strategy for measuring and reporting clinical performance, which we 
discussed earlier, could serve as a model for stakeholders to move 
forward in developing interoperability standards.
    Another promising example is the Council for Affordable Quality 
Healthcare's CORE program. CAQH is an alliance of health plans--which 
includes AHIP and many of our member organizations--that promotes 
collaborative efforts to streamline health care administration. Its 
CORE program has brought together multiple industry stakeholders to 
create and, ultimately, disseminate and maintain operating rules to 
facilitate real-time, comprehensive, secure transfer of patient 
eligibility and benefits information.
    The initiative was launched because the private sector recognized 
the need for an interoperable solution for communicating member data to 
physician practices. Currently, practices do not have easy access to 
consistent information on plan coverage, co-pays, deductibles and other 
benefits information. CORE will change that by creating a variety of 
standards, including clear definitions and interpretations of data 
elements, technical transmission standards and formats, and standards 
for data transactions.
    The CAQH program is modeled on the strict information-exchange 
rules that make possible direct deposits and ATMs in banking. If the 
initiative's rules can be as successful in unifying the health care 
industry, the projected administrative savings for physician practices 
would be significant.
    Uniform standards will spur the development of a national framework 
that facilitates the creation, maintenance, and sharing of electronic 
health information. It is critically important for this framework to be 
national, rather than regional, to ensure that health information can 
be exchanged electronically whenever and wherever it is needed to 
improve patient care.

Privacy and Security
    AHIP supports efforts to assure privacy and security for health 
information. Consumers must have confidence that portable and Internet-
enabled health information systems are maintained in a secure and 
confidential manner.
    We believe that significant protections for health information 
already are provided through HIPAA and corresponding regulations. HIPAA 
governs the use, disclosure, and security of health information by 
health care providers, health care clearinghouses, and health plans. As 
a result, these HIPAA-covered entities should encounter few, if any, 
issues that would compromise privacy or security when participating in 
a National Health Information Network.
    Two issues, however, merit additional consideration. One question 
is the extent to which entities that may use or disclose electronic 
health information should be required to institute privacy and security 
safeguards if they do not meet the definition of a ``covered entity'' 
for purposes of the HIPAA rules. The Department of Health and Human 
Services should develop a regulatory strategy to ensure that these 
entities (e.g., banks and financial institutions that administer credit 
card transactions when patients pay co-payments in a doctor's office) 
provide privacy and security protections as appropriate.
    Another issue involves the interaction of other Federal and state 
privacy laws and the electronic exchange of health information. Some 
Federal and state laws may serve as a barrier to interconnectivity by 
unduly restricting the types of information that can be shared and the 
methods used to exchange information. For example, state laws that 
restrict the disclosure of information related to specific diseases or 
medical conditions may limit the ability of clinicians to participate 
in a National Health Information Network.
    State laws may provide other barriers, including impediments to the 
use of electronic prescribing devices. Additionally, inconsistent state 
laws may prevent the electronic exchange of certain health information 
across state lines; such laws may be particularly burdensome for 
providers that treat consumers who reside in areas near the border of 
one or more states. HHS should work with Congress and other 
stakeholders to identify potential conflicts and consider whether such 
laws should be preempted. Policymakers should consider the importance 
of clear rules for the exchange of health information, while at the 
same time recognizing the impact that privacy rules have on health care 
quality.

Financing
    AHIP supports public and private efforts to finance the adoption of 
health information technology with the goal of improving the quality 
and delivery of health care.
    The health care community is investing significant resources in 
health information technology. For example, many health insurance plans 
and health care providers are using equity, loans, and venture capital 
to fund the adoption of health information technology and electronic 
record systems. This trend will continue as more members of the health 
care community recognize a return on these investments through improved 
health care and greater administrative and business efficiencies. In 
addition, health insurance plans and the Medicare program are 
developing incentives to compensate providers for using health 
information technology and evidence-based outcomes measures to promote 
better quality care.
    The Federal Government can also play an important role by assisting 
solo practice physicians and others who may not have the financial 
resources to develop and adopt the necessary infrastructure to 
participate in the national health information network. This assistance 
can be provided in the form of incentives, low-interest loans, grants, 
and tax credits that reward quality through the adoption and 
integration of technology solutions. Tax credits would be a 
particularly effective approach to stimulating improvements in 
productivity through the use of information technology. This assistance 
should be directed toward achieving the overall objective of improving 
the quality and delivery of health care.

VI. Concerns About Pending Legislation
    AHIP and our members appreciate the strong Congressional interest 
in health information technology. We believe it is particularly helpful 
that this issue is being addressed on a bipartisan basis in both the 
Senate and the House. At the same time, we do respectfully suggest that 
legislative efforts in Congress should avoid prescriptive rules (e.g., 
regulating the design and operation of PHRs) that could hinder ongoing 
collaborative efforts. Instead, we hope that any legislation considered 
by Congress will allow a public-private process to move forward to 
develop and implement uniform standards and operating rules for 
interconnectivity.
    Additionally, we would like to highlight our concerns about two 
specific issues addressed by pending legislation.
Regional Health Information Organizations (RHIOs)
    AHIP supports efforts to define an appropriate role for community-
based efforts--such as Regional Health Information Organizations 
(RHIOs)--within the overall development of a national health 
information system. First, however, a national framework needs to be 
developed to pave the way for regional initiatives. This framework is 
essential to ensure interoperability across the health care system, not 
only in local regions, but across state lines and nationally.
    We recognize that RHIOs can play a constructive role in fulfilling 
health information needs at the regional level, yet we also believe 
that an overreliance on RHIOS--in the absence of Federal standards--
would complicate efforts to achieve compatibility across the country. A 
key factor for a successful national health information network is the 
ability to move information whenever and wherever it is needed. This 
goal cannot be achieved by regional systems that are unable to exchange 
information outside their geographic area. Therefore, it is important 
for regional projects to comply with national interoperability rules. 
Otherwise, stand-alone regional networks will be unable to facilitate 
national information exchange.
    We look forward to working with Congress to discuss how RHIOs can 
operate within a national framework to ensure that practice patterns 
can be compared across regions, quality monitored, and efficiency 
improved.

Safe Harbors
    We also believe it would be a mistake to relax Federal fraud and 
abuse laws for the purpose of allowing hospitals to support physician 
use of health information technology. We are concerned about the 
unintended consequences of tying physicians to hospitals financially 
through equipment subsidies or electronic record sharing. Moreover, the 
ability of physicians to cooperate with other providers--and deliver 
services in a range of hospitals--may be hindered if they become 
dependent on a hospital-based information sharing network.
    Another serious concern is that the proposed safe harbors could 
unintentionally lead to information sharing programs that are isolated, 
and would therefore impede the development of the interconnected system 
that is needed to exchange information on a national basis. Instead of 
encouraging isolated pockets of record sharing, we should focus on 
promoting open and interconnected systems that assure the free flow of 
information.
    We believe that creating new exceptions to current fraud and abuse 
laws is not only unnecessary, but will undermine the integrity of the 
existing regulatory framework.

VII. Other Elements of a Broad-Based Strategy
    While health information technology can go a long way toward 
addressing cost and quality challenges, this is only one component of 
the broad-based strategy that is needed for transforming the health 
care system. Policymakers should at the same time encourage and pursue 
a variety of other programs and initiatives to further advance quality 
and efficiency.
Invest in Cost Effectiveness and Translational Research
    While the Federal Government invests heavily in clinical research, 
it makes only modest investments in research that compares the relative 
effectiveness of existing versus new therapies that are designed to 
treat the same condition. The Federal Government should assign a high 
priority to this kind of research and also direct more funding to 
promote the widespread adoption of best practices and reduce the 
overuse and misuse of health care.
    A National Center for Effective Practices should be created to 
ensure that the results of cost effectiveness research are translated 
into usable information for providers and consumers. This new entity 
could identify and make publicly available the latest advances in 
evidence-based medical practices, and also shed light on procedures 
determined to be less effective.

Develop a Framework for Evaluating Technologies for Effectiveness and 
        Efficiency
    To address the rapid development of new procedures, devices and 
other technologies, a public-private framework should be established to 
evaluate and compare the effectiveness and efficiency of these 
technologies. Moreover, new post-marketing surveillance models should 
be developed to assess the appropriate use and long-term value of 
certain breakthrough drugs, devices and biologicals.

Overhaul the Medical Liability System to Ensure Effective Dispute 
        Resolution and Promote Safety and Value
    The flaws in the current medical liability system should be 
addressed with reforms that place reasonable limits on health care 
litigation. Additionally, patient safety legislation is needed to 
establish legal protections for medical error information reported by 
health care providers, and to permit the aggregation of data that can 
be used to determine the causes of medical errors and develop 
strategies for improving patient safety. Also needed is a uniform, 
national administrative process to resolve malpractice disputes between 
patients and health care providers in a fair and efficient manner, thus 
avoiding the need for litigation as often as possible.
Modernize and Maximize the Effectiveness of the Regulatory System

   Encourage choice with uniform rules in the small group 
        market: A common set of rules would encourage competition, 
        enhance consumer choice, and provide greater predictability for 
        employers. The solution is not to waive all requirements for 
        particular groups, but to establish an appropriate and 
        consistent framework for all participants to ensure that small 
        employers have maximum options to meet their needs. This means 
        that the Federal and state governments need to work together to 
        encourage ``best practice'' regulation. This process has begun 
        with the development of draft legislation--known as the State 
        Modernization and Regulatory Transparency (SMART) Act--that 
        would promote uniformity in plan processes, particularly 
        internal and external review of coverage disputes, speed-to-
        market and market conduct standards.

   Encourage prompt product approval and consistency in 
        regulatory processes. Steps should be taken to ensure that 
        states adopt a mechanism by which health insurance plans can 
        bring innovative products to the market in a timely manner. 
        Ideally, the Federal Government should encourage states to be 
        forthcoming regarding their standards for policy rate and form 
        filing requirements and to abandon unwritten ``desk-drawer 
        rules.'' This ultimately will create oversight mechanisms that 
        allow companies to provide consumers with the products they 
        need in a timely manner.

   Establish an independent advisory commission to evaluate the 
        impact of mandates on health care costs and quality. Such a 
        commission could advise policymakers on the safety and 
        effectiveness of proposed and existing mandated health 
        benefits, and assess whether proposed mandates result in 
        improved care and value. The commission's findings also could 
        inform public program coverage and decision-making to ensure 
        that evidence-based standards are applied consistently in 
        Medicare, Medicaid, and other public programs.

Provide Funding for High-Risk Pools
    AHIP's Board of Directors approved a statement in June 2004, 
indicating support for Federal funding for state high-risk pools to 
cover individuals who have unusually high health care costs. This 
legislation fits within the parameters of what Congress is able to 
accomplish from a budgetary standpoint at this time. This initiative is 
one of the next steps Congress should take as part of a long-term 
strategy for strengthening our Nation's health care safety net.

Expand Tax Credits to Encourage the Purchase of Health Care Coverage
    To address the needs of working Americans who are uninsured and 
ineligible for public programs, Congress can help make health coverage 
more affordable by expanding tax credits for low-income persons. This 
approach will be particularly helpful to Americans who do not have 
access to employer-sponsored coverage and to those who decline such 
coverage because of the high cost. Moreover, tax credits could prompt 
more small businesses to offer employee health benefits. The Employee 
Benefits Research Institute (EBRI) \6\ has reported that among small 
employers that do not offer employee health benefits, 71 percent would 
be more likely to seriously consider offering health benefits if the 
government provided assistance with premiums.
---------------------------------------------------------------------------
    \6\ ``Small Employers and Health Benefits: Findings from the 2002 
Small Employer Health Benefits Survey,'' Employee Benefits Research 
Institute, January 2003.
---------------------------------------------------------------------------
Provide Adequate Funding for Public Programs
    More than 75 million Americans rely on government health programs--
including Medicare, Medicaid and SCHIP--to meet their health care 
needs. It is important for policymakers to recognize that funding 
shortfalls in these programs can lead to cost shifting, which 
translates into higher costs for employers, individuals, and other 
purchasers of private sector health coverage. This underscores the 
importance of ensuring that Medicaid and other government health 
programs are adequately funded.

VIII. Conclusion
    We appreciate this opportunity to testify on this crucial priority. 
AHIP and our members are committed to playing a leadership role in 
developing an interconnected health care system--based on national, 
uniform standards--in which consumers and providers have access to 
patient-owned PHRs that provide integrated health information, from all 
clinicians and all settings of care, in a usable form and in a timely 
manner.
    As Congress addresses issues surrounding health information 
technology and quality, we are eager to continue working with you to 
support the transition to a modernized health care system that is 
effective for patients and valuable for all stakeholders.
                                 ______
                                 
          Appendix: Health Information Technology Initiatives 
                       by Health Insurance Plans

    Aetna is applying innovative health information technology to 
provide its members and providers evidence-based decision support tools 
to improve quality of care and patient safety. Aetna's MedQuery program 
applies evidence-based clinical rules to data derived from members' 
medical claims and pharmacy and laboratory data to uncover 
opportunities to improve care and avoid potential medical errors. The 
MedQuery program generates patient-specific diagnostic or therapeutic 
suggestions called Care Considerations that are communicated to the 
treating physician.
    In addition, Aetna Navigator TM, a member self-service 
website, is a web-based portal that allows members to access a wide 
range of tools and information. These resources are focused on giving 
members the information and guidance they need to navigate the health 
care system and to make the most informed decisions. Aetna Navigator 
TM is secure, private, and accessible anywhere a member has 
an Internet connection.
    Blue Cross Blue Shield of Massachusetts, Neighborhood Health Plan, 
and Tufts Health Plan are working with providers and employers to 
provide access to affordable, quality health care for all Massachusetts 
citizens through their e-prescribing initiative. The e-prescribing 
initiative was established in October 2003, and represents a 
collaboration among the health plans, DrFirst, and Zix Corporation. The 
program subsidizes handheld devices for providers, a one-year e-
prescribing application license, installation, training and support, 
and 6 months of Internet connectivity where applicable.
    At the end of the first quarter of 2005, over 2,600 providers had 
joined the program; over 2,000 prescribers had the technology 
incorporated into their offices; and over 40,000 electronic 
prescriptions were sent during the final reporting period in March 
2005--a 41 percent increase from the highest weekly prescription count 
of the previous quarter.
    BlueCross BlueShield of Tennessee formed a new company, Shared 
Health, with the goal of improving the delivery of health care for 
patients, doctors, hospitals and health care payers. Shared Health has 
developed Community Connection, a patient-centered community health 
record (CHR) that securely connects medical professionals to a database 
that merges individual patient health care information, including 
claims data, lab results, prescription drug information, and 
immunization history. Shared Health Community Connection effectively 
removes a key obstacle in the health care delivery system--a lack of 
information that impedes health care decisions and drives up costs.
    Shared Health's CHR is currently serving Tennessee's TennCare 
population. Next year, BlueCross BlueShield of Tennessee will make 
Community Connection available to its commercial and private health 
plan clients. Other private health insurers will then be invited to 
participate. Ultimately, Shared Health's Community Connection will be 
accessible to consumers to review their own personal community health 
record. Based on an extensive cost-benefit analysis, Shared Health 
Community Connection will ultimately provide an estimated return on 
investment to the State of Tennessee of more than $4 saved for every $1 
spent, within 4 years of implementation.
    CIGNA HealthCare, in 2004, launched myCIGNAplans.com, a national 
award-winning website for consumers who are considering a CIGNA 
consumer-directed health plan. The site offers an unbiased, side-by-
side comparison of the medical and pharmacy costs of CIGNA health plans 
and helps consumers choose the one best suited for their needs. The 
website is customized to include information specific to the 
individual's plan options and is highly interactive, allowing consumers 
to model various health scenarios to determine how health events may 
impact their benefits and costs. The site was introduced with the 
launch of CIGNA's new suite of consumer-directed health plans; in a 
three-month period, 100,000 consumers enrolled for these new health 
plans.
    In addition, in April, CIGNA launched an integrated online Hospital 
Value Tool to help consumers choose a hospital. The online tool 
provides ``star-based'' health care patient outcome and cost efficiency 
ratings for hospital-based treatments of 19 medical conditions using 
both CIGNA and third-party hospital data. The new tool is available to 
the general public at no charge and rates Patient Outcomes (a 
combination of quality measures--risk-adjusted, complication and 
mortality rates, and The Leapfrog Group Patient Safety Index) and Cost 
Efficiency (based on the hospital's risk-adjusted total costs) for a 
particular medical procedure or condition. CIGNA HealthCare members may 
also access more extensive and detailed quality information for more 
than 150 hospital-based procedures and conditions through the CIGNA 
member web portal, myCIGNA.com.
    Group Health Cooperative in Seattle, Washington, utilizes a 
clinical information system (CIS), created by Epic Systems and called 
EpicCare, that facilitates the rapid, accurate, and secure sharing of 
patient medical records among providers involved in a patient's care. 
EpicCare continually stores and updates a patient's entire medical 
record, providing doctors with instant access to a far more 
encompassing knowledge base than was previously available.
    This system enables e-prescribing, provides information on 
recommended and appropriate drug prescriptions, generates warnings for 
potential safety conflicts between multiple drugs, and allows patients 
direct access to information including lab results and prescription 
refill reminders. Patients can access their own online medical records 
through secure access to the MyGroupHealth website. In addition, the 
MyGroupHealth website provides a host of online services for patients 
including secure messaging between patients and their health care team, 
online appointment scheduling, online access to immunization records, 
access to Healthwise* Knowledgebase, and condition centers and 
moderated discussion groups.
    Harvard Pilgrim HealthCare, in 2003, launched an updated version of 
its member web portal, HPHConnect. Through this web portal, Harvard 
Pilgrim members can view their prescription drug history; check the 
status of doctor and hospital bills; check the status of referrals and 
authorizations for care; compare hospitals using information about 
quality and patient safety; understand and compare treatment options 
for health care they may need; and securely communicate with Harvard 
Pilgrim.
    In addition, HPHConnect provides online transaction tools that are 
used by thousands of employers, brokers and providers. By the end of 
2004, providers and billing agents were conducting a million electronic 
transactions a month using HPHConnect and other electronic channels. 
HPHConnect provides instant checks on patient eligibility and claims 
status, and ensures that referrals arrive before patients do. This 
means less paperwork and more control over cash-flow for clinicians, 
and fewer administrative hassles for patients, before and after they 
receive care. Almost 99 percent of member eligibility checks and 87 
percent of claims inquiries by provider offices are completed 
electronically, rather than by phone or fax.
    Harvard Pilgrim is also participating in two Massachusetts regional 
health initiatives--Massachusetts-SHARE (MA-SHARE) and the 
Massachusetts eHealth Collaborative (MAeHC). MA-SHARE's aim is to 
encourage the exchange of health care data through information 
technology, standards and administrative simplification, to ensure that 
clinical health information is available wherever needed in an 
efficient, cost-effective and safe manner. MAeHC is bringing together 
the state's major health care stakeholders to establish an EHR system 
that would enhance the quality, efficiency and safety of care in 
Massachusetts.
    Health Alliance Plan (HAP) awarded a grant to the Henry Ford Health 
System for its Picture Archiving and Communication System (PACS), which 
replaces x-ray films with digital images. This initiative makes care 
more seamless for patients as they do not have to repeat tests, 
provides almost immediate access to results for providers enabling the 
delivery of timely medical care, and greatly reduces administrative 
costs. Physicians can simultaneously call up diagnostic images and 
related information online allowing for multiple consultations. The 
initiative reduces overuse and misuse of services, and prevents medical 
errors as radiologists avoid unnecessary retakes of tests and 
procedures. In 2004, PACS produced a cost savings of $8.84 million.
    In addition, General Motors, Ford Motor Company, DaimlerChrysler 
Corp., and the UAW joined together to launch the Southeast Michigan e-
Prescribing Initiative (SEMI) in partnership with HAP, other Michigan 
health plans, electronic prescribing technology providers, and pharmacy 
benefit manager Medco Health Solutions, Inc. Eleven medical centers now 
use e-prescribing technology as a result of this initiative and 
physicians have written over 70,000 prescriptions. The Henry Ford 
Medical Group improved its generic use rate by 7.3 percent, which 
potentially will save $3.1 million in pharmacy costs over a one-year 
period.
    HAP also has implemented an online reminder tool to help physicians 
keep more patients up-to-date with crucial preventative health 
services. The Member Health Manager (MHM) shows primary care physicians 
and OB/GYNs electronic, on-screen reminders for breast, cervical and 
colorectal cancer screenings, well-child visits, and flu and pneumonia 
immunizations. During a six-month pilot for MHM, more than 3,000 HAP 
members received preventative services after physicians viewed online 
reminders. The guidelines are evidence-based, offering recommendations 
that are well-supported in medical literature.
    Lastly, HAP has implemented an automated process to identify and 
stratify chronically ill members according to the severity of their 
illness so that HAP providers can deliver the most appropriate and 
personalized interventions. This process gathers medical claims, ER 
visits, inpatient hospitalizations, pharmacy claims and lab data. An 
algorithm then uses this data and ICD-9 codes to assign a Health Risk 
Indicator score to each member and ensure that they receive the proper 
case management. The ultimate impact on clinical and financial outcomes 
is currently being monitored.
    Kaiser Permanente is currently in the process of rolling out Kaiser 
Permanente HealthConnect--a $3 billion, 10-year initiative focused on 
deploying electronic medical record systems to ensure the best care for 
their members and provide doctors, nurses and others caregivers with 
real-time information. In addition to an electronic medical record, 
Kaiser Permanente HealthConnect involves the development and deployment 
of a highly sophisticated nationwide information management and 
delivery system that integrates the clinical record with appointments, 
registration, and billing. The Kaiser Permanente HealthConnect program 
is expected to deliver improvements in care delivery and promote cost 
savings across the entire Kaiser Permanente organization. Through 
advanced technology and an integrated care delivery system, Kaiser 
Permanente will eliminate the inefficiencies and error proneness of 
paper-based systems.
    Patients, physicians and other authorized health care staff will 
have access to complete, up-to-the-minute medical records, including 
test and lab results. Immediate access to the best-practice medical 
science will help physicians and other health care professionals 
streamline patient care processes and improve health outcomes. 
Referrals to specialists can be made on the spot; prescriptions are 
sent to pharmacies electronically; and two doctors treating the same 
patient from different locations can share information in real-time. 
Through the new system, patients will also be able to schedule 
appointments, request medication refills, and ask for referrals. Full 
deployment of Kaiser Permanente HealthConnect across all of Kaiser's 
regions will be completed by 2007.
    Southwest Medical Associates (SMA), the largest multi-specialty 
physician group practice in Nevada and a subsidiary of Sierra Health 
Services, began investing in information technology in 2002 to 
transform the way health care is delivered and managed in Nevada. The 
first step was the implementation of an electronic prescribing tool 
from Allscripts Healthcare Solutions. E-prescribing has increased the 
appropriate use of generic drugs from 59 percent to 65 percent, saving 
millions of dollars in drug costs for patients and their health plan 
sponsors.
    SMA also migrated all patient paper medical records to an 
electronic environment. The medical record data for all patients is now 
documented electronically and is accessible immediately to all SMA 
providers from any location within SMA and remotely through a secure 
web-based interface. The end result is that administrative costs for 
maintaining paper records have declined while the quality and 
timeliness of the information available to providers at the point of 
care is dramatically improved. In addition, SMA has implemented a 
digital radiology environment that allows images to be made available 
immediately for review and evaluation at any site. The reduction in x-
ray film lowered the average cost of a study from $2.67 to $1.58.
    In the near future, SMA plans to expand use and access to their 
TouchWorks EMR beyond health care professionals at SMA to other 
providers within the Las Vegas Valley as well as to patients 
themselves. By expanding access of summary medical information to 
patients, SMA will be contributing to the development of a PHR. In 
addition, in partnership with Health Plan of Nevada (HPN), SMA will 
provide a secure web-based link to summary EMR information. This 
initiative will enable all providers within the HPN network to view 
critical medical information and allow patients to view and print their 
medical record information to share with providers wherever they seek 
care. The rollout of the PHR for HPN members is expected to begin in 
the third quarter of 2005.
    WellPoint Health Networks launched an extensive private health 
initiative to equip physicians with health information technology tools 
in 2004. Approximately 19,500 technology packages were distributed--
17,000 of which were desktop computers designed to help physicians use 
the Internet for administrative transactions and enhance general 
medical knowledge. E-prescribing solutions were given to 2,700 
providers.
    This initiative has resulted in over 60,000 electronic 
prescriptions to date and the number continues to grow. In addition, 
WellPoint currently has its own electronic medical record using claims-
based data deployed at Blue Cross Blue Shield of Missouri (owned by 
WellPoint), and will soon launch a plan to make this data available to 
emergency rooms throughout Missouri.

    Senator Ensign. I would like to thank all of you once 
again, for your excellent testimony. I understand, Ms. Bostrom, 
that you have to testify on the House side, so I will start 
with you. Exciting companies are investing in a lot of health 
information technology. I know there are a lot of companies. I 
visited Cisco and McKesson when I was in California. Health 
information technology was part of my own personal experience 
and practice. And, I enjoyed visiting some of the information 
technology companies and seeing some of the products that are 
being offered. I think health information technology is very 
exciting.
    I want to ask one question, and maybe even one comment 
before you leave. Many physicians service several hospitals. 
They drive from place, to place, to place. This can be 
frustrating for the patient and family members. Before my 
grandmother passed away, she was in a hospital for a few weeks. 
As a family member, I was waiting, and waiting, and waiting, 
and waiting, for the physician to show up to the hospital for 
an update. It seems to me that if a physician had the ability 
to access electronic health records from home, the physician 
could see what went on at night. Dr. Glaser, it would seem to 
me that the number you mentioned, which indicates that only 11 
percent of savings are accruing back to the physician might be 
a little more than 11 percent. Physicians are still going to 
have to make hospital visits, but electronic health records 
would seem to make their time a lot more efficient. Electronic 
health records assist in improving the quality of care and 
reduce physician driving time. If the physician accesses health 
records from multiple points, including the records that are at 
the hospital, and several other health care facilities, it 
seems to me that electronic health records can facilitate more 
efficiency. And, for the physician who is treating a patient 
from back east, or out west, or wherever the other person is, 
they could have access to all of the necessary electronic 
health records.
    Obviously, there are significant benefits, but are products 
being developed, to allow physicians to do this?
    Ms. Bostrom. The points you've raised about the healthcare 
industry are interesting, because if you look at our high tech 
industry, the employees are people that work for our company. 
What is different of course in healthcare is the doctors, as 
you mentioned they work for and with a number of providers and 
the independent. And so the question is how do you provide them 
with access to this information. How do you motivate the 
hospital or the clinic to help the doctor get access to this 
technology or these applications?
    So I think number one, on the application side there are a 
number of applications being developed, many of them have been 
deployed.
    The question is, are there financial incentives for the 
providers, or the doctors as was mentioned earlier to adopt 
there. If they accrue the savings, where does that savings go? 
Does it go to them, so they can reinvest, or does it go 
somewhere else? And will they be assured that they're going to 
get that reimbursement? I mean right now, if you want to do an 
e-mail exchange with a doctor, that doctor may or may not get 
reimbursed for that. He is not highly incented to do it. So I 
think that's where the government can help motivate this.
    I would say the second factor is an area I know you're 
familiar with, which is the idea of broadband, and broadband 
access. Because many of these doctors, and many of these 
smaller clinics are located in pockets of the country where 
they're not located near a major medical facility. So the idea 
of can they get easy access to X-rays, or other types of 
diagnostic equipment, is the connectivity in place for them to 
do that? So I think the combination of financial incentives, 
and universal broadband are going to be two factors where the 
government can help. I think if you talk to most of the 
technology providers, we're ready with the applications, and 
the technology. We need to make sure the motivation is out 
there and the encouragement to move forward rapidly.
    Senator Ensign. Dr. Glaser, I would like to hear more about 
the comments you made concerning the physician, versus hospital 
settings, and your references to small hospitals. A lot of 
people have talked today about financial incentives for health 
information technology, including initiatives through the tax 
code, and through other direct means. These types of 
initiatives are always very difficult. We're hearing about huge 
savings, and in this case, to the hospitals, to the insurance 
companies, and some to the physician. However, it sounds like 
the majority of the savings would be realized by others--not 
just by the practitioner. We have to be careful when it comes 
to an investment in health information technology. We don't 
want to establish a program that then creates a life of its 
own. If there is an initial investment, we have to be very 
careful. I believe we have to be careful in how we structure 
any type of incentive. My question for you Dr. Glaser is with 
regard to the small hospital. You said that a lot of small 
hospitals can't afford to adopt and implement health 
information technology. Well if those hospitals put pen to 
paper, or if these hospitals have a lot of Medicaid patients, 
it would seem to me, that if they put health information 
technology in place, there would be a huge return on the 
investment. So have studies been conducted on this matter? For 
every dollar spent on health information technology, how much 
of a return is obtained, and why wouldn't a small hospital 
obtain the same kind of return? I understand the physician's 
point of view on this topic, but I don't understand the 
hospital situation you mentioned.
    Dr. Glaser. I think what we find even in our studies, for 
Partners, it's a net economic loss. While we're better at 
treating diabetic patients, and we paid the expense of doing 
that, there's no revenue upside for doing that. So whether 
you're big or you're small, it's a loss. We happen to be large 
enough and have vision, and that's not to demean the visions of 
others, that we're going to go off and do this. Because of 
this, we have begun to work with our local payers to increase 
the incentive if we do better diabetes care, or we reduce 
errors, then there are additional funds. And people are 
learning about what's the right mix of dollars, and the right 
format of all of those things.
    So the economic--and that's not to say that there's no 
economic gain at all; because there is a reduced paperwork, and 
a variety of other things. But net--it's pretty much an 
economical loss regardless of size, small doctors, 50-person 
group, physicians, small hospital, big hospital.
    Senator Ensign. It's an economic loss, even to a hospital, 
is what you're saying?
    Dr. Glaser. If we reduce medication errors, in the study 
that Dr. Carolyn Clancy cited of several thousand dollars 
associated with the medication errors. That is expense to 
someone who is underwriting the care. And in a very perverse 
way, if we have to keep you another day because we hurt you, we 
make money on that. It's kind of this odd thing that we 
actually net up on an error rather than net down. Because if we 
send you home early, we've got a vacant bed that we now have to 
fill.
    Senator Ensign. Well, that brings us to Ms. Ignagni. You've 
been around Washington long enough to know that every time we 
try to come up with a payment system for the Medicaid and 
Medicare programs, we go through all of the machinations of how 
to perfect a payment system, and none of them seem to work very 
well. There are perverse incentives, some of which you have 
mentioned. We don't pay for performance right now. We put 
artificial numbers on things and we don't pay for best 
practices. But it would seem to me, Ms. Ignagni, that your 
industry needs to help us come up with a way to incentivize 
providers based on performance. Does that require changes in 
Stark laws? What is required for you to be able to give us a 
model that can be used? Hopefully we can change our Medicare 
reimbursements and our Medicaid reimbursements to reflect some 
of the changes you are asking for.
    Ms. Ignagni. Thank you Mr. Chairman, as you know, we're way 
ahead of the public sector programs in terms of pay-for-
performance, quality measurement and prioritizing, this value 
question that you're inviting. We believe that we are an 
important focal point, where all of this information comes 
together. In fact we've provided evidence where a physician 
group affiliated with the Sierra health plan in your area is 
actually working on a personal health record with the health 
plan, and this I think will presage what will happen throughout 
the healthcare system. So we're launching now.
    Is a consolidated, organized effort going to be doing it 
hand-in-hand, with physician groups, with consumer groups to 
begin to develop the rules of the road for personal health 
records so that plans will not compete on the way that personal 
health records are organized, what is in them and so on? We can 
make it Internet-capable. We can make it patient-owned. We 
could make it portable. That is what patients want. That is 
consumer-centric and we're excited about that, and we can work 
with a broad collaborative to get the rules of the road 
established. At the same time, the goal is to synch this up 
with what is going on in the area of electronic health records, 
and electronic medical records so that they can all be 
compatible. So that's what we're about to launch, we're on the 
precipice of that, we're very excited about it. Because this is 
the area of our core competency, that we can bring to the 
delivery system, to help patients, to help providers, to align 
the quality and the incentives through the payment system in a 
way that I think the public sector will ultimately adopt as 
well.
    Senator Ensign. I would like to follow up quickly, and then 
I'll turn it over to Senator Allen. The savings that everybody 
seems to be talking about, appears to accrue more to health 
plan members than they do to others in the healthcare system. 
And so are you reflecting your payment incentives. You said 
that you're paying for performance. I imagine that if you have 
electronic health records, you have better performance. But, 
are there direct incentives for those who adopt certain 
electronic health records?
    Ms. Ignagni. I think what you see all over the country is 
indeed that there are, and there will be more as we go through 
this year and next year. But the incentives are not disembodied 
from the quality of performance, and so it is the point about 
do you incent the adoption of technology, or do you incent the 
quality goal which will require the adoption of technology. 
We're focusing on the latter not the former, because that will 
achieve the kinds of efficiencies and effectiveness that we 
need.
    In terms of the results accruing to the health plan, the 
dollars that go to the health plan then get passed-back in 
terms of more affordable rates, for public and private sector 
purchasers and increasingly consumers that are buying on their 
own, and so that's the pass-back in terms of the folks who are 
using the healthcare system. And so that is what happens to 
that.
    Senator Ensign. Dr. Basch, would you like to comment on 
that?
    Dr. Basch. I would agree completely. And thank you Mr. 
Chairman for the opportunity to add a comment. I was surprised 
I didn't get a question from you about this--why did I adopt 
these advanced tools that not only cost me more money, but take 
more uncompensated time.
    Senator Ensign. Actually, as a veterinarian, I adopted some 
of the same kinds of systems that you did. I understand why 
health information technology cost you a significant amount of 
money, especially in a small practice. But I recognize that you 
want to practice better.
    Dr. Basch. Right. But I also responded to an opportunity 
afforded me by a private payer, and to be the first, ``Bridges 
to Excellence'' practice in the District of Columbia. This is a 
pay-for-performance program through a private payer which 
rewards us for achieving certain processes. They're made easier 
with information technology, but the technology is not 
required. And what I like about that program, and programs that 
look at quality and process improvement, is they're focused on 
what we achieved, not necessarily focused on the IT tools 
purchased.
    So in this case my practice was given the opportunity to 
achieve a bonus for 3 years if we made certain process 
improvements. This made the purchase of information technology 
and practice redesign for my small practice, a smart business 
choice, rather an onerous mandate.
    Senator Ensign. Did the program help you see how process 
and quality of care would improve?
    Dr. Basch. They would have. However, I was aware of this 
program long before it was offered to me, and I was waiting for 
it to come to this region. But certainly as part of the 
program, yes sir, they do make you aware of what it can do and 
what kinds of technology are necessary to best reach those 
goals.
    Senator Ensign. Thank you. Senator Allen.
    Senator Allen. Thank you, Mr. Chairman, and thank you all 
for your testimony. I'm just trying to get a theme through all 
of this from the different perspectives, and this is an 
outstanding panel. Both panels were. But this is just from the 
delivery system. Listening to first Ms. Bostrom, who did have 
to leave. She was talking about how much less $8,000 versus 
$1,000 per worker invested, in non-medical versus medical, so 
you wonder why that's the case and that fits in very closely 
with Dr. Glaser's testimony. And then Dr. Basch was saying, 
well what in the heck does it matter, because of reimbursement.
    So as we're trying to figure out incentives, we need to 
understand what will incent someone to make--what will motivate 
someone to do as Dr. Basch has done, or we would like others to 
do similar to McKesson. When you hear and read testimony of the 
400,000 alerts triggered weekly to nurses to advise them of 
wrong medication. In all the stats, the numbers of incorrect 
diagnoses, wrong medications, and so on, and the loss of life, 
or added injuries that are caused by that. That's a great 
concern. Just for the delivery of health, much less the 
question of ethical, or proper professional services. So going 
through all of this, you get the reimbursement situation, which 
is probably not clearly going to be the purview of any of this 
legislation, but something that ought to be addressed. You 
would think that in Susan Bostrom's testimony, she's talking 
about Virginia where Cisco has provided a system that enables 
radiology reports to be delivered to doctors in minutes, rather 
than days.
    You would think that as healthcare professionals you would 
want to do that. It's just faster, quicker and obviously, get 
on to whatever treatment is necessary. Then we hear from the 
insurance folks. And I was glad your last question got into it, 
because one of the things I hear a lot from physicians about, 
is medical liability cost and how it is skyrocketing. And it's 
one of the reasons there are no physicians in rural areas or 
small towns, regardless of whether they have access to 
broadband or not. They want to be--which I'm very much in favor 
of. But they're going to need to be with a hospital, because 
they just cannot afford all the costs of medical liability 
insurance. So when you look at the adverse outcomes, due to 
incorrect medications. And that's usually, or maybe not knowing 
what someone's allergy is, and therefore prescribing the wrong 
medicine, or somebody reads it wrong because doctors are famous 
for their handwriting. Or infamous I should say. If what this--
the use of these tools, and these safeguards, and these double-
checkings, you ended up with fewer lawsuits. I'm not saying 
everyone of these ends up in a lawsuit, not every adverse 
medical outcome ends up in a lawsuit. However some do and that 
drives up the cost of insurance to settle those claims, whether 
they're litigated the whole way through or not. If you could 
end up with fewer medical liability or medical malpractice 
suits then could insurance companies, and this is an incentive, 
this is from the private sector, discount for such safeguards, 
or for assisted living facilities, which have really high 
liability costs. Obviously it's 24-hour service that may have 
these bar codes and so forth on them, or anything like that. 
Could there be a discount, for each professional, or each 
facility that adopts these sort of practices? Because that is 
an economic matter which I think would relate also to lessened 
liability, because of the more careful practice of medicine. It 
seemed like Dr. Basch said that he was doing it anyway.
    But I would ask Ms. Ignagni, if any sort, and I know you 
don't speak for all insurance companies, but could something 
like that be put forward to incent, and I think reduce the 
liability risk from outcomes that are due to negligence?
    Ms. Ignagni. I think you're appropriately pointing out, we 
have two issues of medical liability. One is the direct cost of 
the lawsuits. The other is far greater: the defensive medicine 
that goes along with that. It's a $100 billion premium for 
defensive medicine, so you're quite right to probe. Just as 
we've seen from an insurance perspective we're incenting 
providers to reach goals and objectives in the area of quality 
and reimbursing more when they reach those goals. One could 
imagine my members write health insurance, we're health 
insurance plans. We don't do liability insurance or malpractice 
insurance, but one could reasonably suspect that the same logic 
would apply and you could tie some of these things with the 
presence of moving in this direction, having these tools and 
techniques--because it would lessen the ability of lawsuits, or 
risk, or it would have use. So I think it's a very reasonable 
idea.
    And I can tell you in the policy community, more and more 
people are beginning to talk about it, so I think you're onto 
something there.
    Senator Allen. Ms. Pure, have you found any benefit from 
the approaches that you all take with your bar-coding and 
checking and so forth, insofar as any insurance, or liability 
insurance costs?
    Ms. Pure. A number of our customers have gone to their 
malpractice insurers to ask for some compensation relief when 
they have basic safety standards in place. But it's really 
state-to-state practice, insurer-to-insurer. There is nothing 
across the board that we have seen happen. You know, one of the 
things we don't count into the cost savings is nursing 
turnover, nursing retention, and nursing satisfaction. We have 
study after study that shows that nurses are happier, more 
satisfied, and their retention rates go up dramatically if they 
feel like they're practicing care in a safer environment. So I 
think there are a lot of intangible costs that we need to look 
at as well.
    Senator Allen. That's a very good point. The nurses, 
they're in such great demand and they are there all the time. 
To the extent that you can maximize their assistance, and I 
will tell you they are the key people in every hospital. 
Nothing against the physicians, but the nurses are the ones who 
are there, giving comfort, assurance, and monitoring. And if 
they can't handle it, obviously they have to bring in a 
physician. Dr. Basch you ended up getting in a roundabout way, 
you ended up getting some sort of insurance break, or 
incentive. I was listening closely, what is your insurance 
company? Do you think others--if I discern that correctly, do 
you know if there are any other insurance companies that 
provide such incentives, or reduced premiums let's say?
    Dr. Basch. Senator, actually what we ended up getting was 
the opportunity for participation in a program from a payer, a 
private payer to increase payments to us for quality 
improvement. Not a reduction in malpractice. And if I may 
expand my answer a little bit about the issue of malpractice in 
the outpatient setting. This has been looked at extensively, 
and most lawsuits in the outpatient or ambulatory setting are 
not that similar to ones that occur in the inpatient or 
hospital setting.
    In the hospital setting there is clear evidence that the 
use of advanced systems such as computerized physician order 
entry has been demonstrated to reduce medication errors. These 
medication errors in the hospital setting have a higher 
potential to cause harm and lead to lawsuits, compared to the 
outpatient setting. We see the advantage of the advanced EHR 
not just in reducing mistakes but in helping to move mediocre 
care to excellent care. And I hope we don't have malpractice 
lawyers coming up with a new business schema here. Patients 
don't typically sue for just getting mediocre care, if they did 
we would have a many more suits in this country.
    Senator Allen. Thank you. Dr. Glaser, did you have anything 
to add?
    Dr. Glaser. Senator, I think it's interesting, I give you 
one set of points, when we put in a provider order entry. 
Senator Kerry mentioned earlier we did a pre/post examination 
of our malpractice experience. We self insure with all the 
other Harvard teaching hospitals. Our malpractice cost dropped 
3 percent, which we attribute to CPOE even though there are a 
small number of cases, and there's a tail on these things you 
can take years between suit and settlement for example. So 
there was evidence of a decrease. And the one question is why 
not more? Why was there only 3 percent? It could have been 
whatever set of numbers you want. And it turns out the bulk of 
the malpractice experience is surgical mistakes and children 
born with defects or problems et cetera. And those form the 
bulk of the malpractice experience. Which a lot of these 
technologies won't do much for. So the leverage points may not 
be largely in the malpractice arena. It may be much more 
significantly on whether we do routine care well, or whether we 
administer the right drugs and a variety of other things which 
may not always, in fact rarely, wind up in the courts.
    Senator Allen. Thank you. Thank you, Mr. Chairman, and 
thank you ladies and gentlemen for the outstanding 
perspectives. I appreciate it.
    Senator Ensign. Senator Kerry?
    Senator Kerry. Thank you, Mr. Chairman. I apologize to the 
panel but unfortunately we have competing hearings, so I had to 
go over quickly to another one. I understand from the Chairman 
however that the testimony has been just terrific and we 
certainly appreciate that very, very much. Dr. Glaser, you also 
hold a position do you not as the President or Chairman of the 
National e-initiative. eHealth Initiative?
    Dr. Glaser. Senator, I'm the head of the board of the 
eHealth Initiative, which is a non-profit coalition of multiple 
stakeholders in the industry who come together to see how we 
can solve, resolve a variety of issues that go on.
    Senator Kerry. How long has that group been in existence 
now?
    Dr. Glaser. Senator, I'm going to hazard to guess about 5 
years I believe.
    Senator Kerry. How many players are there in it?
    Dr. Glaser. There are approximately 120 to 140 members who 
come from a wide range of stakeholders.
    Senator Kerry. They're all focused on this one concept?
    Dr. Glaser. Correct.
    Senator Kerry. What would you say if there is a concensus? 
What would be the order of priority of concensus about what is 
needed, and how we might be able to proceed?
    Dr. Glaser. Well I think, Senator, the concensus would be 
number one, we have to change the financial incentive system 
here. We suggest the doctor invest, but nonetheless the 
economic value is insufficient, and they balk at that. So 
that's number one.
    And the eHealth initiative has drafted a framework called 
Parallel Pathways * which you all may want to include in the 
record, there are copies of it at the table here, that outlines 
approaches to the financing. And I'm not sure how the mechanics 
work of adding it to the record on all of that. So that would 
be number one, looking at the incentive structure and migrating 
it to increase the sophistication over time.
---------------------------------------------------------------------------
    * The information referred to has been printed in the Appendix.
---------------------------------------------------------------------------
    Number two is helping the small physician practice. If 
you're Dr. Peter Basch and you're a solo practitioner who in 
the world do you turn to? There are 300 EMR vendors out there. 
How do you pick the right one, who's going to help you? And so 
it would be the second area that we focus on, and the third is 
the standards realm.
    Senator Kerry. Is that in order of priority?
    Dr. Glaser. Yes sir.
    Senator Kerry. So you believe we could proceed to get 
technology out into the marketplace, before we actually had 
this broad standard in place?
    Dr. Glaser. I think Senator, we ought to go after the 
standards and be very serious about that, and support a lot of 
the Secretary of Health and Human Services, and Dr. Brailer's 
activities in this regard. Nonetheless, I don't think we can 
wait. We've talked about the number of people who will die 
today because of errors. The railroads couldn't wait, the 
electrical power people didn't wait. All kinds of people didn't 
wait. You had to have them along the way, but they didn't wait.
    Senator Kerry. Dr. Basch, what are the principal incentives 
that would make a difference? You've spoken about the view from 
the practitioner, what do you think would make the most 
difference to that practitioner?
    Dr. Basch. Senator, I think----
    Senator Kerry. If you've answered any of this incidentally, 
just say it's in the record and I'll get it. I don't want to 
have everybody repeat stuff.
    Dr. Basch. I haven't really addressed this in particular, 
and I'm happy to answer your question. I think the most 
important issue in terms of incentives is aligning them not 
just as has been stated by other panelists, with technology 
adoption; but aligning them for the optimal use that we would 
like to see from the technology. I want to reiterate that my 
testimony focused on those optimal uses, and not just a narrow 
conformance to a performance measure, or quality standard. But 
it is understanding that the way we're really going to 
transform the healthcare system enabled by this technology, is 
to use it to accomplish other goals such as e-visits. One thing 
we could do is start paying for e-visits. This would help 
doctors and patients to not waste time by doing everything in 
the context of an office visit.
    Second, we could incentivize care coordination. I showed a 
slide during my presentation of a patient registry that is 
integrated with my electronic health record, and while the 
slide perhaps didn't show as well as it does on my screen when 
its close up, what it really does is give me the same powerful 
tools in my EHR to use on all of my patients; not just the ones 
who remember to come in, or feel sick at that moment. But I can 
look at all of them, and make sure based on whatever my 
practice, my health system, or national goals are, are acted 
on. So if diabetes is a condition that we're not doing a good 
job on I can focus on it. But for me to use that tool in my 
practice requires that I take time away from the reimbursable 
activities of office visits, and require patients to come in 
for other visits or simply just ignore patients who don't come 
in.
    Senator Kerry. What's the most effective way to do that, 
because it sounds labor intensive. I mean it's now somebody has 
got to invest time, and somebody has got to instruct. Who's 
going to do that?
    Dr. Basch. Sure. I think there are actually some work-
through mechanisms that have been sorted out that work quite 
well in the office setting, and it's a combination of office 
staff, and the physician. There are certain things, certainly 
that the physician doesn't have to do, for example using the 
registry to see who needs to get certain tests. That can be 
done by staff, that can be automated, that can even be sent in 
terms of reminders to the patient by secure e-mail. In terms of 
managing the actual numbers and the fine points of care, I 
think a clinician does have to be involved in looking at who 
the patient is, their age, their concurrent conditions because 
one of the things we want to avoid as we try and move medicine 
from mediocrity to best practices is to make sure that we don't 
commit other errors. For example, taking a patient who is 
toward the end of life and looking inappropriately at their 
cholesterol, and saying ``well the number says I should put you 
on a cholesterol medication,'' when obviously it's 
inappropriate.
    So I think we need to always remember good clinical 
judgment.
    Senator Kerry. Interesting. Ms. Pure, I was looking at what 
you sent up here, and I have a relative who was recently in the 
hospital who was given one of these, and looked in it and it 
was the wrong medicines. Self-determined, thank heavens. But 
that happens all the time and these I gather are sort of the 
antidote to that. What would it take to get the industry to do 
this?
    Ms. Pure. Well, it's really interesting, Senator Kerry, if 
you look in this packet, some are M&Ms and some are Skittles, 
and with candy it doesn't really matter. But that happens 
everyday in a hospital and people die when they take the wrong 
medication. So what we see is a major trend to bar-code meds, 
and actually label them on the back for the patient who is 
supposed to receive those meds. The patient wears a wrist band. 
The nurse wears a wrist band. The nurse scans herself, scans 
the patient, scans the med. And if it's not the right time, or 
the right dose, or the right med, it prevents the nurse from 
administering the drug. So it's a tremendous safety check.
    You know, the frustrating thing is we talked about billions 
and billions of dollars to change the whole healthcare system 
and that's certainly going to take us to the end state that we 
all want to get to. But your average hospital could be scanning 
meds in 6 months, for somewhere between half a million, and a 
million dollars.
    Senator Kerry. For that hospital?
    Ms. Pure. For that hospital.
    Senator Kerry. So system-wide what are you talking about?
    Ms. Pure. System-wide, in the hospital, at every nurse 
station, every med could be scanned. Of course it costs more if 
it's a really large hospital like John's but for your average 
hospital around the country in 6 months you could be up and 
scanning meds and eliminating errors.
    Senator Kerry. And what kind of incentive? Is there one 
that's needed to get people to do that? Have you got a cost 
analysis on what the savings are, in terms of the error?
    Ms. Pure. The savings unfortunately for medication 
scanning, are soft savings, in terms of preventable mistakes. 
Nursing satisfaction. The only real dollar savings are 
potentially in better management of the medication inventory. 
But a lot of people don't give the technology credit for just a 
reduction in inventory. So the savings are soft.
    Senator Kerry. Well the savings are the 7,000 lives lost 
due to inappropriate medications.
    Ms. Pure. Exactly, in terms of dollars. But the loss is 
intolerable in terms of not doing it.
    Senator Kerry. But I would assume that there's a medical 
malpractice cost associated with that, which is calculatable.
    Ms. Pure. Right. And what we haven't seen is a broad scale 
change in malpractice insurance. Insurance premiums based on 
hospital scanning.
    Senator Kerry. Well you have a great name for selling this. 
Ms. Ignagni, just quickly from the health insurance plans' 
point of view, what's the most important incentive here? How do 
you get the companies across the board to rapidly embrace this? 
Is it financial incentive of a significant amount, or is there 
some other trick?
    Ms. Ignagni. Actually Senator, this is a most important 
question and I appreciate it. We're doing a number of things 
already to incent quality performance, to align objectives and 
reimbursement. To move in the direction of computer order 
entry, to pay more for that. For example to pay more for 
achieving certain goals with respect to diabetes management, 
chronic care management with respect to cardiac disease, et 
cetera. So we're well on our way to doing that. But what we 
realize is that we're a focal point for all of these data in 
the system through the claims picture. So what we're doing now 
is we're launching an effort with provider specialty societies, 
consumer groups, similar to one that we have just completed on 
ambulatory care in terms of quality measurement. We're moving 
now to this area where we're launching a patient record, and 
have an opportunity to develop rules of the road across our 
health plan, so that they're not competing on the standards. 
Therefore how it looks and what goes on, it can be portable, it 
can be patient-owned, and we're working hand-in-hand with 
speciality societies and patients to move as quickly as we can. 
So when we talk about uniform standards, the reason we raised 
it today is that we've come a long way in about 6 months. Six 
months ago the entire discussion was about regional healthcare 
organizations. And we were worried about regional organizations 
being disembodied from a national framework and that is why we 
raised the issue. Not that the government needs to do 
something. We're well on the way to doing something. We want to 
make it sync up with electronic medical records, that the 
hospitals are developing et cetera, so it can all be part of a 
whole.
    What we see as the number one thing that Congress could do, 
is to really give serious thought to preemption in the area of 
privacy and security. Let me explain that. We have a HIPAA law, 
as everyone knows. We also have 50 state privacy laws. We have 
states acting in security with respect to data security. We're 
going to get a national health information system with respect 
to healthcare, and one needs to give real thought to the 
preemption question. We also need to consider the obligations 
under HIPAA, to banks and financial institutions that now have 
some involvement in this arena, Who are not subject to HIPAA 
guidelines and restrictions. So we're very, very focused on 
that.
    And finally, although I know that there's some disagreement 
about this, we are concerned about proposals that have been 
made to waive the Stark fraud and abuse laws. We're very 
concerned about that, because of what the FTC has already 
discussed with respect to the impact of consolidation in the 
system and what that could do to healthcare costs. So we would 
like to be helpful in terms of trying to solve this problem, 
both from the health plan standpoint and assisting providers in 
making this conversion in the best way possible. And we think 
there's a public and private role.
    Senator Ensign. Senator Kerry, before you continue 
questioning, I need to excuse myself.
    Senator Kerry. I'm finished actually.
    Senator Ensign. I apologize, but I have a funeral to attend 
in Arlington. That is why I need to leave.
    Senator Kerry. If I could just say, maybe we could join 
together, the Administration has asked for the $150 million, 
the House has only given $125 million. I'm told the Senate may 
do less. So perhaps you and I could join together to try to 
write a letter to Senator Specter to at least get the $125 
million if not better, so that we could guarantee that minimal 
sort of effort. And I would love to try and do that with you. 
You raise some very interesting questions. Those are big 
issues, we're going to have to deal with those. And I think we 
need to sit down and figure out because that's a big mouthful, 
all of that. But all of you, thank you, very very much. This 
has been enormously instructive, and I appreciate it. Thank 
you, Mr. Chairman.
    Senator Ensign. Thank you, Senator Kerry. Without objection 
the Senators' written statements, and witnesses' written 
testimony will be made a part of the record. The record will 
remain open for 7 days for Senators to submit questions or 
statements, without objection so ordered. This hearing is 
adjourned, and I thank all of the witnesses for their 
testimony.
    [Whereupon, at 12:15 p.m., the hearing was adjourned.]

                            A P P E N D I X

  Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine

    I join my colleagues in a growing bipartisan effort to use 
technology to address two critical problems we face in health care.
    The first of these is a serious patient-safety problem. The 
Institute of Medicine (IOM) reports that medical errors claim up to 
98,000 lives every year. The good news is that solutions exist: We can 
apply information technology (IT) in health care to dramatically reduce 
errors and save lives. Many of us have heard about how drug 
interactions can be avoided by software systems which check a patient's 
prescriptions for hazards. Yet there are so many other applications 
which can improve health. For example, by reviewing and analyzing 
information, a health provider can help a patient better manage chronic 
diseases such as diabetes and heart disease, and avoid adverse 
outcomes.
    A second critical problem is the escalating cost of health care. As 
we spend more and more of our GNP on health care, we become less 
competitive internationally. At the same time, as health care becomes 
less affordable, more Americans join the ranks of the 45 million 
uninsured. Health care simply must become more efficient.
    Costs can be reduced when tests don't have to be repeated and data 
isn't delayed. In fact, a patient may obtain faster, higher quality 
care when, for example, multiple practitioners can review diagnostic 
test results right at their desktops. In an age where millions of 
Americans share family pictures over the Internet in seconds, isn't it 
long past time that a physician should be able to retrieve an X-ray 
just as easily?
    The President recognizes the disparity in technology utilization in 
health care versus other sectors of our economy. He has declared a goal 
for every American to have an electronic medical record within 10 
years. I concur--we need this and more. In fact, once that record is in 
place we can do so many things better. From preventing drug 
interactions, to managing chronic diseases, to simply helping providers 
operate more efficiently. Most of us have been told at one time or 
another, ``we're waiting to get the test results mailed,'' or ``we're 
still waiting for your chart.'' Health care is one of the last realms 
of such inefficiency.
    It will be essential to achieve common standards to ensure the 
investment which must be made will be secure. Health care providers 
must know that their investment in systems will allow the exchange of 
data--for providing higher quality, more efficient care; for financial 
management, and for continued evaluation and improvement. One must know 
that a system purchased will be compatible with others, and that--no 
matter what may happen in the future to a vendor--the huge investment 
one makes in building an electronic medical record won't be lost. In 
other words, your system must be able to communicate with other 
systems, and your investment in building electronic medical records 
must be preserved. So when a patient moves, their electronic ``chart'' 
should be able to move right along with them, and their continuity of 
care shouldn't be interrupted.
    The efforts of Dr. David Brailer at HHS. and of a number of my 
colleagues in addressing the need for standards and interoperability 
are absolutely essential to making health IT a reality.
    The bad news is that even with standards in place high start-up 
costs could prevent us from reaping the benefits of new technologies. 
Today many providers are struggling to make these investments, and for 
those which serve beneficiaries of Medicare, Medicaid and SCHIP, it can 
be exceedingly difficult. That is why I have joined with Senator 
Stabenow to also address the means of implementing technology.
    We know we will realize significant savings through information 
technology. On that there is bipartisan consensus. Yet as providers are 
facing ever declining payment rates, they also are being told they must 
institute changes in the way they practice, including implementing 
information technology. We know that much of the savings in health care 
IT will accrue to the patient and payer--in such aspects as fewer 
duplicate tests, greater efficiency, and better health management. Thus 
it is appropriate that, as we establish standards, the Federal 
Government also assists providers in helping them adopt the technology. 
This is particularly critical for those providers who see serve our 
Medicare, Medicaid and SCHIP beneficiaries. That is why Senator 
Stabenow and I have developed a means to see that standards are 
implemented expeditiously.
    Today, we have this technology at our disposal, and I strongly 
believe that we cannot afford to delay implementation. Waiting will 
result in not just a loss in dollars which could be saved, but also in 
lives lost.
    I am optimistic that so many of my colleagues are engaged in 
developing health IT solutions. Working together we can realize the 
promise of health care that is safer and more accessible to all.
                                 ______
                                 
      Prepared Statement of the eHealth Initiative and Foundation
  Parallel Pathways for Quality Healthcare--A Framework for Aligning 
      Incentives with Quality and Health Information Technology--
  Recommendations of the Working Group for Financing and Incentives *
---------------------------------------------------------------------------
    * Supported in Part by the Connecting Communities for Better Health 
Program Conducted in Cooperation with HRSA/OAT.
---------------------------------------------------------------------------
                           Executive Summary

    The eHealth Initiative and its Foundation launched in December 2004 
a diverse group of stakeholders through its Working Group for Financing 
and Incentives to develop a set of principles and a Framework for 
incrementally aligning incentives with both quality and efficiency 
goals and the health information technology infrastructure required to 
achieve such goals. The Framework, entitled ``Parallel Pathways for 
Quality Healthcare'' describes both the enabling HIT infrastructure for 
physician practices as well as the standards-based connectivity 
required within regions and communities. The Framework provides a 
phased, integrated approach that recognizes the varying stages of 
evolution with regard to regional multi-stakeholder collaboration, 
focus on quality and performance, and health information technology 
penetration within markets across the United States.
    The following summarizes a set of ``Principles for Financing and 
Incentives'' developed by the Working Group:

        1. Any incentive program focused on quality should also include 
        some level of incentive--either direct or indirect--for the 
        health information technology (HIT) infrastructure required to 
        support improvements in quality.

        2. Any financing or incentive program implemented by either the 
        public or private sector involving HIT should:

        Result in improvements in quality, safety, efficiency 
        or effectiveness in healthcare.

        Incentivize only those applications and systems that 
        are standards-based to enable interoperability and 
        connectivity.

        Address not only the implementation and usage of HIT 
        applications but also the transmission of data to the point of 
        care, both of which are required to support high-quality care 
        delivery.

        Allow for internal quality improvement or external 
        performance reporting as mutually agreed upon by purchasers/
        payers and providers.

        3. Financing and incentive programs should seek to align both 
        the costs and benefits related to HIT and health information 
        exchange.

    The following Framework developed by the Working Group, provides 
guidance to purchasers, payers, practicing clinicians, and regional or 
community-based collaborations focused on health information exchange 
who are seeking to improve the quality, safety, effectiveness and 
efficiency of healthcare in their markets, through HIT and exchange of 
healthcare data. The Framework provides staged guidance in four focus 
areas related to aligning goals for quality healthcare: (1) quality 
capabilities; (2) HIT capabilities within the physician practice; (3) 
health information exchange capabilities; and (4) financial incentives.
    The following summarizes at a high-level the three phases of 
evolution.

   In Phase I, rewards would primarily focus both on reporting 
        of measures that rely on manual chart abstraction and claims 
        data and physician usage of standards-based, interoperable HIT 
        applications with certain basic functionalities.

   In Phase II, rewards would focus on the reporting of 
        measures that rely on clinical data sources; connectivity of 
        standards-based, interoperable HIT applications to clinical 
        data sources to support information needs at the point of care; 
        and physician usage of HIT with more advanced functionalities.

   In Phase III, rewards would focus on performance against 
        process and outcomes measures, while phasing out rewards for 
        HIT.

    It is expected that value will continue to increase through each 
stage to purchasers and payers who engage in the implementation of the 
Framework.
    We are at a unique point in time, where public and private sector 
interests are at an all-time high in two key areas: improving the 
quality and safety of healthcare and moving forward on a health 
information technology agenda. Approaching these two key issue areas in 
a siloed manner--without strong integration across both areas--will 
result in missed opportunities, unintended consequences, and possibly 
reduced impact in both areas. By laying out an integrated, incremental 
strategy, which incorporates goals related to quality, safety, and 
efficiency as well as health information technology and the 
mobilization of data across organizations, the principles and Framework 
included in this document offer the foundation for building a 
healthcare system that is safer, of higher quality, and more effective 
and efficient.

                              Full Report

Introduction and Background
    The eHealth Initiative and its Foundation are independent, non-
profit affiliated organizations whose missions are the same: to drive 
improvement in the quality, safety and efficiency of healthcare through 
information and information technology. The eHealth Initiative is a 
multi-stakeholder consortium representing a wide range of stakeholders 
who share this common goal, including clinicians, health plans, 
healthcare IT suppliers, healthcare purchasers and employers, hospitals 
and other providers, laboratories, patient and consumer groups, 
pharmaceutical and medical device manufacturers, public health 
agencies, and representatives of state, regional and community-based 
health information initiatives and organizations.
    Reports from a wide range of philanthropic and private sector 
organizations including the Commonwealth Fund, Institute of Medicine, 
the Markle and Robert Wood Johnson Foundations, and several non-profit 
organizations, as well as representatives from the public sector such 
as the U.S. Government Accountability Office, the U.S. Department of 
Health and Human Services, the U.S. Department of Veterans' Affairs, 
the Department of Defense, the Medicare Payment Advisory Commission, 
and several Members of Congress, recognize the value of health 
information technology (HIT) in addressing quality, safety and 
efficiency challenges in the U.S. healthcare system. Interest has now 
turned to the development of policies and practices for accelerating 
the effective implementation and use of such systems in a way that will 
assure that expected quality, safety and efficiency outcomes will be 
achieved.
    At the same time, the development and implementation of incentives 
or pay-for-performance programs is on the rise, stimulated by reports 
from the Institute of Medicine and leadership demonstrated by 
organizations such as the Leapfrog Group. Pioneering efforts around 
pay-for-performance are now emerging from Bridges to Excellence (BTE), 
the Integrated Healthcare Association (IHA), the Centers for Medicare 
and Medicaid Services (CMS), as well as several other programs 
initiated by both payers and purchasers. According to one report, 
almost one-third of health plans say that they now have a pay-for-
performance program in place, but most are in the earliest stages of 
development or implementation.
    Pay-for-performance systems provide higher reimbursement for those 
who perform well on a wide variety of quality, cost and efficiency 
measures (which are both process and outcome-oriented). Many of these 
systems have been launched based on the recognition that current 
reimbursement methods are not effectively curbing both rising 
healthcare costs and addressing issues related to quality and safety. 
Many, but not all, of the emerging programs integrate information 
technology expectations, recognizing that information technology can 
not only help with the reporting of the quality data typically required 
for such programs, but can also assist with the achievement of better 
outcomes--in both quality and efficiency.
    While there is recognition of the value of information technology 
usage by providers and the exchange of information across institutions 
to support a comprehensive view of the patient at the point of care, 
adoption by providers--in particular practicing clinicians--continues 
to be low, due to a number of reasons, including the lack of standards 
and resulting perceived risk of purchase as well as the significant 
changes in work flow required to move toward implementation. Many 
believe that the largest barrier to HIT adoption pertains to both the 
lack of capital to purchase such systems, and even more so, prevailing 
reimbursement methods which reward volume of services as opposed to 
outcomes or activities (such as usage of clinical applications) that 
would result in higher quality, safer, more efficient healthcare. 
Recent reports from the Markle Foundation's Connecting for Health 
initiative with additional support from the Robert Wood Johnson 
Foundation, the Center for Information Technology Leadership, and 
MedStar Health, as well as ongoing work by organizations like Bridges 
to Excellence all highlight the issue of misalignment of incentives; 
i.e., in other words, the economic imbalance that exist between those 
who purchase HIT (e.g., practicing clinicians, hospitals and other 
providers) and those who also benefit from its use (e.g., patients, 
healthcare purchasers, and health plans).
    In December 2004, with the support of the eHealth Initiative 
Foundation's Connecting Communities for Better Health Program conducted 
in cooperation with the Health Resources and Services Administration, 
the eHealth Initiative Foundation assembled a diverse group of 
stakeholders under the leadership of Co-Chairs Marianne E. DeFazio, 
CEBS, Director, Global Health Benefits, IBM Corporation and John 
Glaser, Ph.D., Vice President and Chief Information Officer, Partners 
HealthCare System, to launch the Working Group for Financing and 
Incentives (Working Group). The Working Group, which includes 
practicing clinicians, healthcare purchasers, health plans, healthcare 
IT suppliers, and hospitals, came together to define a set of 
principles and strategies for providing financing and incentives to 
improve healthcare through HIT adoption within ambulatory care.
    The purpose of this paper is to summarize key results and findings 
of the first phase of the Working Group's efforts, including the 
insights that were gained, a set of principles for financing and 
incentives, and a framework for designing such programs to align 
incentives with both quality goals and the HIT infrastructure required 
by both practicing clinician offices and health information exchange 
initiatives within markets to support those goals. This framework is 
currently entitled the ``Parallel Pathways for Quality Healthcare'' 
(the Framework).

Overview of the Goals and Objectives of the Working Group
    The purpose of the Working Group was to achieve multi-stakeholder 
consensus on a set of policies and principles for improving health and 
healthcare by leveraging HIT through financing and incentives, 
targeting both physician practices and regional and community-based 
health information initiatives and organizations.
    The Working Group and eHealth Initiative Foundation staff conducted 
a wide range of activities to support this work, including the 
following:

   Reviewing the experiences of a number of incentives and pay-
        for-performance initiatives involving HIT that are operating 
        today;

   Reviewing the results of research and initiatives exploring 
        the need for and results of incentives programs and pay-for-
        performance initiatives; and

   Developing and vetting a set of principles and best 
        practices for incentives with multiple stakeholders across the 
        healthcare system.

Results of Our Review
    The following summarizes the key findings that emerged from our 
work.

   The number of incentive programs for quality and ``pay-for-
        performance'' is on the rise. Over the last several months, the 
        number of incentive and ``pay-for-performance'' programs has 
        significantly increased, fueled by the recognition that current 
        reimbursement methods are not adequately addressing issues 
        related to quality and safety and rising healthcare costs and 
        signals that the U.S. Government is experimenting with similar 
        programs.

   The value of information technology accrues to many 
        stakeholders. The value of HIT and health information exchange 
        accrues to many stakeholders including clinicians, health 
        plans, hospitals, purchasers, patients and public health.

   Coordination and collaboration within the region or 
        community is critical. Widespread adoption of HIT across 
        physician practices may not be possible without broad-based 
        community collaboration and coordination. Physician practices 
        ordinarily contract with a large number of purchasers and 
        payers. As a result, incentives offered by a small number of 
        purchasers or payers generally are not effective. In addition, 
        most of the data required to deliver care within physician 
        practices resides somewhere else (hospital, lab, pharmacy, 
        health plan, etc.) and therefore collaboration and coordination 
        are necessary to facilitate the transmission of data to the 
        point of care. Coordination and collaboration offer many 
        benefits, including providing leverage to achieve widespread 
        participation, reducing the potential for the ``free rider'' 
        effect (in which some purchasers and payers reap the benefits 
        of HIT adoption without sharing the costs), reducing the burden 
        created by physician practices participating in multiple 
        reporting initiatives, and significantly reducing the per 
        participant cost of both transmitting and receiving common data 
        elements for various healthcare needs (e.g., healthcare 
        delivery, performance improvement, etc.).

   Rewards should emphasize the use (not purchase) of HIT 
        applications and eventually focus on performance or outcomes. 
        Most of the market experiments reviewed initially focused on 
        rewarding the acquisition and use of HIT, sometimes in 
        combination with additional incentives for performance. In 
        some, but not all cases, the reward for acquisition/use was 
        designed to diminish or be eliminated over time, while 
        incentives for performance (i.e., outcomes that are linked to 
        increased HIT use) were designed to ramp up. In many cases, the 
        goal appears to be to reward the innovators who adopt HIT 
        fairly early, in hopes of creating a critical mass and reaching 
        a ``tipping point''.

   Incentive amounts offered should be meaningful. According to 
        various reports, incentives offered to stimulate adoption and 
        use among practicing clinicians should be meaningful. Many 
        programs have lacked widespread participation due to the level 
        of amounts offered. In one case (Integrated Healthcare 
        Association), the amount of incentive funding tied to HIT was 
        doubled (from 10 to 20 percent of the overall package) after a 
        lukewarm initial response. According to the recent Connecting 
        for Health report on financing and sustainability, such amounts 
        should total anywhere from $10,000 to $24,000 per physician per 
        year.

   Purchaser or payer sponsors of the incentive program should 
        represent a meaningful proportion of the clinician's patient 
        panel. Because practicing clinicians often work with a large 
        number of health plans and purchasers, in order for incentives 
        to be effective, they must be delivered by a meaningful 
        proportion of the clinician's patient panel. This is evidenced 
        in a number of current market experiments. To address this 
        issue, a significant percentage of the purchasers and payers in 
        a market should be recruited to the incentive program to have 
        impact. According to the recommendations of the National Group 
        for the Advancement of Health Information Technology, regional 
        and community-based initiatives should use a combined 50 
        percent market share as a target. In addition, the National 
        Group suggests that at least 30 percent (and optimally 50 
        percent) of a clinician's patient panel should be covered by 
        some combination of participating patients and purchasers.

   Giveaway programs have had little impact. Some initiatives 
        reviewed in our work had experimented with giving away 
        applications or hardware (e.g., PDAs, desktop computers) to 
        physician practices, with little impact. Programs in which 
        clinicians have had to invest in such systems have demonstrated 
        greater sustainability.

   Any applications covered by the program should be 
        ``interoperable'' and standards-based. In order to derive the 
        full value of investments in HIT, payers and purchasers should 
        only reward the use of clinical applications that are 
        interoperable, using agreed-upon data standards. Over time, 
        incentives programs should require that the interoperability of 
        such applications is actually leveraged--in other words, the 
        transmission of certain data required for clinical care (e.g., 
        lab, pharmacy, etc.) to the HIT application to support the use 
        of such information at the point of care should be required.

   Certification and accreditation can offer purchasers and 
        payers confidence. As purchasers and payers begin to adopt 
        incentive and pay-for-performance programs, they will likely 
        need assurance that systems adopted by physicians are 
        interoperable, functional, and utilized. Several groups have 
        emerged to address these various certification needs including 
        the National Committee for Quality Assurance and the 
        Certification Commission for HIT.

   Policies related to information sharing should be built into 
        expectations. As information flow accelerates, it is necessary 
        to establish ``rules of the road'' for information sharing. The 
        adoption of agreed-upon principles related to the use, access, 
        privacy and security of health information are crucial to 
        assuring public trust in emerging health information exchange 
        initiatives. Connecting for Health is spearheading a 
        collaborative approach for the development of such principles 
        with a delivery date of Fall 2005.

   Emerging health information exchange initiatives, networks 
        and organizations should be leveraged to facilitate effective 
        and efficient information sharing. Over the last year, a number 
        of state, regional and community-based multi-stakeholder 
        initiatives have emerged to begin to address the need for 
        information mobility within markets across the country. These 
        initiatives and the organizations that evolve from them should 
        be leveraged to facilitate information sharing and the 
        transmission of data to both physician practices and purchasers 
        and payers participating in incentive programs that need 
        performance data to support their requirements. The National 
        Coordinator for HIT has referenced in its Strategic Framework 
        for Action the creation of organizations that would conduct 
        such activities, calling them ``Regional Health Information 
        Organizations'' or ``RHIOs''. The eHealth Initiative Foundation 
        is developing common principles (organizational, legal, 
        financial and technical) for such health information exchange 
        initiatives and organizations through its Connecting 
        Communities for Better Health Program, to provide guidance to 
        and assure public trust in such organizations and initiatives 
        as they develop across the United States.

Bringing it All Together: A Set of Principles and Framework for 
        Implementing Incentives for Higher Quality, More Efficient 
        Healthcare
    Based upon the work conducted to date, the Working Group developed 
a set of high-level principles for financing and incentives, and an 
incremental framework designed to align incentives with purchaser and 
payer expectations around quality and efficiency as well as the HIT 
infrastructure--both within the physician practice and across the 
region or community through health information exchange--to support 
those expectations.

Principles for Implementing Incentives
    The following set of ``Principles for Financing and Incentives'' 
were developed by the Working Group:

        1. Any incentive program focused on quality should also include 
        some level of incentive--either direct or indirect--for the 
        health information technology (HIT) infrastructure required to 
        support improvements in quality.

        2. Any financing or incentive program implemented by either the 
        public or private sector involving HIT should:

        Result in improvements in quality, safety, efficiency 
        or effectiveness in healthcare.

        Incentivize only those applications and systems that 
        are standards-based to enable interoperability and 
        connectivity.

        Address not only the implementation and usage of HIT 
        applications but also the transmission of data to the point of 
        care, both of which are required to support high quality care 
        delivery.

        Allow for internal quality improvement or external 
        performance reporting as mutually agreed upon by purchasers/
        payers and providers.

        3. Financing and incentive programs should seek to align both 
        the costs and benefits related to HIT and health information 
        exchange.

An Incremental Framework for Aligning Incentives Around Quality and HIT
    Early on in the process, participants in the Working Group and 
several other stakeholders involved in the vetting process, recognized 
the importance of aligning incentives with not only quality and 
efficiency improvements in healthcare, but also the HIT infrastructure 
needed to support those improvements.
    Most incentive programs in place today use claims-based information 
and manual patient record abstraction as the means to determine the 
quality of care received by patients. There are well researched and 
documented shortcomings to the use of claims data to determine the 
quality of care delivered, including the lack of timeliness, in some 
cases, its inaccuracy, and the lack of its ability to provide important 
physiological data on patients that are the true markers of clinical 
outcomes. In addition, manual extraction of data from paper-based 
charts is time-consuming and expensive. And, according to some reports, 
charts for patients cannot always be located. The use of clinical 
applications and health information exchange dramatically increase the 
accuracy, timeliness, and availability of information to support the 
determination of quality of care by purchasers and payers administering 
performance-based incentive programs. The development of this 
infrastructure also builds the foundation for an evolving set of 
expectations without building in additional reporting burden.
    Finally--and more importantly--the use of clinical applications and 
the mobilization of patient data through health information exchange 
also creates the foundation and infrastructure for quality and safety 
improvement by supporting the provision of important patient 
information at the point of care and enabling clinicians to improve the 
quality and safety of care as it is being delivered to patients.
    Markets across the country are in various stages of evolution in 
terms of performance expectations, HIT penetration, and cross-community 
collaboration. Recognizing these various stages of evolution, the 
Working Group developed a staged process designed to support a wide 
range of markets as they transition to an electronic and more 
performance-based healthcare environment.
    The Framework that follows, entitled ``Parallel Pathways for 
Quality Healthcare'', provides guidance to purchasers, payers, 
practicing clinicians, and regional or community-based collaborations 
seeking to improve the quality, safety, effectiveness and efficiency of 
healthcare in their markets through the use of HIT and health 
information exchange.
    The Framework provides staged guidance in four focus areas related 
to aligning goals for quality healthcare: (1) quality capabilities; (2) 
HIT capabilities within the physician practice; (3) health information 
exchange capabilities; and (4) financial incentives.
    The following summarizes at a high-level the three phases of 
evolution:

   In Phase I, rewards would primarily focus both on the 
        reporting of measures that rely on manual chart abstraction and 
        claims data and physician usage of standards-based, 
        interoperable HIT applications with certain basic 
        functionalities.

   In Phase II, rewards would focus on the reporting of 
        measures that rely on clinical data sources; connectivity of 
        standards-based, interoperable HIT applications to clinical 
        data sources to support information needs at the point of care; 
        and physician usage of HIT with more advanced functionalities.

   In Phase III, rewards would focus on performance against 
        process and outcomes measures, while phasing out rewards for 
        HIT.

    Ongoing (ex-post) incentives that can be utilized for financial 
incentives include the following:

   Bonus or ``add-on'' payments--an addition to the normal 
        payment--for HIT in accordance with the criteria included in 
        the Framework.

   A portion of the pay-for-performance incentive is directed 
        to HIT adoption--higher in the early years, lower (and 
        eventually phased out) in the later years.

   Payment for structured e-mail consultations or other 
        telehealth services.

   Chronic care management fees.

    Upfront (ex-ante) incentives that can be utilized to defray some of 
the up-front infrastructure costs associated with the initial adoption 
of standards-based, interoperable HIT, include the following:

   Seed funding provided by governmental, philanthropic or 
        private sector contributors.

   Advance payment of future services from health information 
        exchange initiatives or clearly articulated expectations and 
        commitments from clinicians.

   Low cost or guaranteed loans.

   Tax incentives.

    It is expected that value will continue to increase through each 
stage to purchasers and payers who engage in the implementation of the 
Framework.

   In the first phase, the staged Framework will enable 
        purchasers and payers to clearly articulate and communicate a 
        common set of expectations through a staged process. The 
        Framework provides clinicians with the tools needed to improve 
        performance in the early years and that ultimately results in 
        payment for outcomes. Immediate gains in quality and safety 
        will be achieved, as documented by several market experiments.

   In the second phase, the efficiency, timeliness, and 
        accuracy of reporting will significantly improve with the 
        reduction in the use of manually extracted chart information 
        and claims data in the calculation of measures and the increase 
        in the use of clinical data derived from electronic sources. 
        The type and number of measures required can be increased based 
        on the more robust HIT infrastructure. Increased gains in 
        quality, safety and efficiency should be achieved given the 
        information available to the clinician at the point of care.

   In the third phase, purchasers and payers can phaseout HIT 
        rewards and move to payment based on outcomes and performance. 
        A robust and flexible HIT infrastructure will be in place to 
        support evolving science and changing expectations of 
        purchasers, payers, providers, and consumers.

    A detailed overview of the Framework is outlined below.

------------------------------------------------------------------------
 Area of Focus        Phase I            Phase II          Phase III
------------------------------------------------------------------------
Quality         1. Create an        1. Expand          1. Report
 Capabilities    environment that    capabilities to    achievement of
                 supports            utilize clinical   certain outcomes
                 improvements        information.       and processes.
                 quality and
                 safety.
                2. Agree on and     2. Report
                 report common set   measures that
                 of standardized     leverage
                 measures to be      expanded
                 reported over the   clinical data
                 three phases        capabilities.
                 based on the
                 National Quality
                 Forum set.
                3. Leverage claims
                 data and manual
                 chart
                 abstraction.
------------------------------------------------------------------------
Physician       1. Direct usage of  1. Direct usage    1. Robust IT-
 Practice HIT    HIT by physicians   of HIT with        supported
 Capabilities    with certain        expanded           clinical
                 basic               functionalities.   environment
                 functionalities.                       supporting
                                                        chronic care
                                                        management.
                                    2. Secure          2. Electronic
                                     standards-based    health record
                                     connectivity       with integrated
                                     between HIT and    decision support
                                     clinical data      and ability to
                                     sources for lab,   accept and
                                     prescription and   integrate
                                     demographic data   structured,
                                     (health            computable data
                                     information        from other
                                     exchange).         organizations.
------------------------------------------------------------------------
Health          1. Engage           1. Operate secure  1. Expand
 Information     practicing          health             services to
 Exchange        clinicians,         information        provide value to
 Capabilities    hospitals and       exchange, making   users as
                 other providers,    available to all   appropriate.
                 purchasers,         authorized
                 payers and          healthcare
                 consumers in        organizations
                 health              who agree to
                 information         terms for
                 exchange            information
                 initiative.         sharing.
                2. Launch health    2. Send
                 information         standardized
                 exchange            data to
                 capability using    physician
                 agreed upon         practices.
                 technical and
                 information
                 sharing
                 standards.
                3. Develop          3. Send reports
                 sustainable model   of quality
                 based on agreed-    measures to
                 upon services.      purchasers and
                                     payers with
                                     provider
                                     consent.
------------------------------------------------------------------------
Financial       1. Reward use of    1. Reward use of   1. Reward
 Incentives      standards-based     interoperable      electronic
                 HIT.                HIT with           documentation of
                                     connectivity       improved
                                     with clinical      clinical
                                     data sources.      outcomes.
                2. Reward           2. Reward          2. Phase out
                 reporting of        reporting of       rewards for HIT.
                 subset of           expanded set of
                 measures based on   performance
                 data primarily      measures that
                 derived from        require clinical
                 manual chart        data sources.
                 abstraction and
                 claims.
------------------------------------------------------------------------
Value to        1. Communicate      1. Enhanced        1. Full migration
 Purchasers      common set of       efficiency,        to payment based
 and Payers      expectations and    timeliness and     on outcomes.
                 incremental         accuracy of
                 roadmap for         reporting.
                 getting to
                 outcomes.
                2. Achieve          2. Improved        2. Flexible HIT
                 immediate gains     ability to         infrastructure
                 in quality.         target areas in    to support
                                     need of focus.     changing
                                                        expectations.
                                    3. Significant
                                     improvements in
                                     quality, safety
                                     and efficiency
------------------------------------------------------------------------

Stepping Through the Process
    The following summarizes in detail, the staged approach for 
aligning incentives with quality and efficiency goals, as well as the 
HIT and health information exchange capabilities needed to support 
these goals. As noted above, this incremental, staged approach 
recognizes the various stages of evolution within each market including 
the history of regional collaboration, focus on quality and performance 
and HIT penetration. The phased approach allows for multiple natural 
experiments to occur throughout the country, to determine the best 
course of action, based on their current stage of evolution.
Phase I of the Framework

1. Quality Capabilities
    Phase I of the framework begins to create an environment that 
supports improvements in quality and safety. The intent of the Working 
Group is not to create new measures of quality healthcare, but to align 
with a common set of consensus-based standardized measures developed by 
others (e.g., the National Quality Forum). The quality expectation in 
this phase is that providers will electronically report a subset of 
this adopted full set of quality and efficiency measures. The principle 
is that providers are not being paid or rewarded for implementing HIT 
systems in their practices, but they are given incentive to do so 
because the only cost-effective method to electronically produce these 
clinically-oriented quality data in the long-run is to implement such 
systems. As providers become more capable of collecting and 
transmitting this data electronically, the expectation is that they 
will report the full set of quality measures adopted at this stage to 
receive the full range of incentives.

2. Physician Practice HIT Capabilities
    In the first phase, physicians are expected to directly interact 
with standards-based HIT systems. These may be self-contained EHR 
systems, prescription writers, and other forms of electronic 
recordkeeping and healthcare process support systems. At this stage, 
the ability of practices to purchase, install, train, and use HIT 
systems is very much dependent on a means of justifying a relative 
large outlay of time and money. Short term incentives can take many 
forms, but must help to address the bolus of resources required to get 
set up and started.

3. Health Information Exchange Capabilities
    In the first phase, diverse stakeholders within the region or 
community will be engaged to define common principles and priorities 
for working together. Organizational and legal infrastructures as 
appropriate, will be developed and information sharing policies will be 
determined, based on emerging national standards. Technical models for 
health information exchange will also be launched based on national 
standards. A sustainable model for the financial and functional health 
of the health information exchange capabilities will be developed and 
agreed upon by stakeholders.

4. Financial Incentives
    In the first phase, providers will be rewarded for the use of HIT 
to electronically report a subset of quality measures (pay for quality 
data). Although ``start-up'' incentives can take many forms, it is 
appropriate, whether they take the form of up-front funding or back-end 
payment, to base the reward on a common set of criteria that will focus 
the providers' efforts in the direction of future stages of 
development. One way to do this is to tie the rewards to the electronic 
reporting of a subset of predetermined data elements which are thought 
to be tied to the quality of care. Although at this stage the reward is 
not dependent on the data showing that the quality of care has been 
improved, it sets the stage for later phases that do so.

5. Value to Purchasers and Payers
    In the first phase, purchasers and payers will be able to 
communicate a common set of expectations that build over time and 
establish an incremental roadmap for getting to payment for higher 
quality outcomes. They will achieve immediate gains in the quality of 
healthcare delivered and some cost savings, depending on the extent to 
which HIT resources are implemented and used at this stage, while 
laying the foundation for a robust infrastructure to support higher 
quality, more efficient healthcare.
Phase II of the Framework

1. Quality Capabilities
    In the second phase, providers are expected to report measures that 
leverage their expanded clinical data capabilities to document improved 
processes of care. Reports of clinical lab results that indicate that 
the percentage of diabetic patients in a practice that has reached a 
predetermined level of receiving a periodic Hemoglobin A1c test, is an 
example of the performance improvements that can be documented.

2. Physician Practice HIT Capabilities
    Advancement to the second phase of HIT capabilities requires secure 
HIT connectivity with clinical data sources such as those associated 
with lab and prescription data. Capabilities must include secure 
communications with more than one other organization using national 
standards (labs, pharmacies, hospitals, etc.). These capabilities not 
only support the needs of purchasers and payers that provide 
incentives, but also the information needs of clinicians at the point 
of care.

3. Health Information Exchange Capabilities
    In the second phase, a fully operational, secure health information 
exchange capability is made available to all authorized healthcare 
organizations who agree to terms of health information sharing. Sending 
standardized data to physicians (from data sources such as labs, 
pharmacies, and hospitals) becomes much easier to accomplish. Sending 
reports of quality measures electronically to purchasers (with provider 
consent under contract) can be done routinely.

4. Financial Incentives
    In the second phase, providers who implement interoperable HIT with 
connectivity and electronic reporting of a full set of measures, 
including those that leverage clinical data source, are rewarded.

5. Value to Purchasers and Payers
    In the second phase, reporting to purchasers and payers is more 
accurate, efficient and timely. The ability of the data reporting to 
target areas in need of focus is improved. Increases in the types and 
level of data to support improvements should result in considerable 
improvements in quality, safety and efficiency.
Phase III of the Framework

1. Quality Capabilities
    In the third phase, providers are required to achieve certain 
process measures and outcomes to receive rewards. Having built the 
health information infrastructure with incentive support in Phases I 
and II, the provider has many of the tools necessary to support a 
transformed care delivery process.

2. Physician Practice HIT Capabilities
    Movement to the third phase requires a robust IT-supported clinical 
environment that supports clinical decision support and chronic care 
management. The provider's electronic health record must integrate 
decision support and have the ability to accept and integrate 
structured, computable data from other organizations. It should be 
noted that Phase III provides the opportunity to remove the artificial 
barrier between clinical systems and administrative (billing) systems.

3. Health Information Exchange Capabilities
    In the third phase, health information exchange initiatives and 
organizations can expand services to support physician adoption of HIT 
and quality improvement. Examples include the provision of electronic 
access to evidence-based, national clinical decision support rules (for 
integration with computer-aided decision support systems in EHRs).

4. Financial Incentives
    In the third phase, providers are rewarded for the electronic 
documentation of improved clinical outcomes as well as progress against 
process measures. Purchasers and payers begin to phase out rewards for 
HIT given that most of the HIT infrastructure has already been 
developed and that getting to this phase requires providers to 
effectively utilize interoperable, connected, clinical applications.

5. Value to Purchasers and Payers
    The third phase enables full migration to payment based on 
outcomes. It also enables a flexible HIT infrastructure to support 
changing expectations (different or expanded measures). It should be 
noted that the infrastructure required in the third phase has the 
opportunity of enabling payers to move ``coding'' for reimbursement 
into their adjudication processes through automation based on actual 
clinical documentation. Re-engineering of reimbursement systems could 
result.

Summary
    Creating pay-for-performance and other incentive programs in the 
marketplace that are not consistent with the principles in this 
document can have negative consequences. Without common, agreed upon 
pathways for moving forward, the transition of physician practices 
toward electronic systems along with increasing performance 
expectations will be confusing, difficult and costly. Providing a 
process that clearly communicates purchaser and payer expectations over 
time using a staged approach will help clinicians anticipate, prepare 
and build the infrastructure required to achieve those expectations 
over time.
    Providing incentives for quality and efficiency without at the same 
time, supporting the development of the HIT within physician practices 
and health information exchange capabilities within regions and 
communities to support improvement will result in the creation of 
siloed systems that might be quite effective in producing performance 
reports, but are not conducive to providing information back to 
providers where it is needed most--at the point of care. In addition, 
providing incentives for HIT alone, without connectivity expectations, 
has the potential of simply automating the highly fragmented, paper-
based, ineffective system that exists today, wasting limited resources.
    It should also be noted that the HIT and health information 
exchange capabilities described in the Framework are suitable for many 
needs, including those related to population and public health, 
provision of patient-centric health information to consumers, clinical 
research, performance reporting, and most importantly--delivery of 
healthcare. All stakeholders within healthcare should strive to move 
toward a common system--decentralized but based on national standards 
and policies--to support our Nation's health and healthcare needs.
Next Steps: Where Do We Go From Here?
    The eHealth Initiative and its Foundation intend to expand upon and 
accelerate the adoption of the principles and Framework developed by 
the Working Group through a wide range of activities in 2005 and 2006.

        1. We will further develop the principles and policies 
        contained in the Framework. This work will be conducted through 
        eHealth Initiative Foundation's various stakeholder-focused 
        working groups, including the Working Group for Small 
        Practices, the Employer Purchaser Advisory Board, and the 
        Working Group for Connecting Communities (which is made up of 
        state, regional and community-based health information exchange 
        initiatives and organizations). In addition, a health plan-
        focused group will be organized to facilitate significant input 
        from and collaboration with payers in the enhancement of the 
        Framework.

        2. We will translate the principles and policies contained in 
        the Framework into practical ``how to'' guides, detailed 
        policies, and tools that will support understanding and 
        implementation by healthcare purchasers, business coalitions, 
        health plans, practicing clinicians, and health information 
        initiatives/organizations in markets across the United States. 
        One of the tools that will emerge from this work will include 
        detailed technical specifications (using nationally accepted 
        data standards) for ambulatory performance measures that are 
        emerging from the National Quality Forum's consensus process. 
        We will also develop various tool-kits and guides to support 
        the implementation of those measures both within physician 
        offices and by health information exchange initiatives. The 
        guides and tools developed will leverage the work of Federal 
        agency-commissioned projects related to standards, the work of 
        Connecting for Health and other national standard-setting 
        initiatives both within the public and private sectors and be 
        supported by eHealth Initiative Foundation's various 
        stakeholder-focused working groups, including the Working Group 
        for Small Practices, the Employer Purchaser Advisory Board, and 
        the Working Group for Connecting Communities.

        3. We will support implementation through both funding and 
        providing technical assistance to a set of pilot projects or 
        ``market experiments'' that test and evaluate various 
        components of the Framework. These same pilot projects will 
        also implement and evaluate the technical and information 
        sharing policy deliverables that emerge from Connecting for 
        Health. This work will be conducted through the eHealth 
        Initiative Foundation's Connecting Communities for Better 
        Health Program. The challenge award process will be announced 
        this summer.

        4. We will conduct working meetings and symposia designed to 
        facilitate dialogue and learning among healthcare stakeholders 
        that are experimenting with incentives around quality and HIT 
        in their markets to further inform and enhance the Framework, 
        through the Working Group for Financing and Incentives.

        5. We will utilize the policies and principles contained within 
        the Framework to inform emerging policy vehicles at the Federal 
        and State levels, through eHealth Initiative's Policy Working 
        Group. It is anticipated that a number of policy vehicles will 
        emerge during 2005. We will work to educate policymakers on the 
        principles and components of the Framework to assure that goals 
        around HIT and quality/safety are integrated.

        6. We will utilize the insights gained from each of the above-
        identified activities to enhance the Framework through the 
        Working Group for Financing and Incentives. The Working Group 
        will continue to serve as the ``hub'' for this work, 
        synthesizing the input and learning derived from each of the 
        above-identified activities, to continually enhance the 
        Framework and principles.

        7. We will widely disseminate the Framework, through a wide 
        range of vehicles including eHealth Initiative's diverse and 
        influential membership, AHRQ's National Resource Center for 
        Health Information Technology, targeted outreach to key groups 
        and associations, eHealth Initiative's Connecting Communities 
        for Better Health Program conducted in cooperation with DHHS; 
        our State and Regional HIT Policy Summit Initiative; targeted 
        outreach to policymakers at the Federal and state levels, and 
        general public relations activities.

Conclusion
    We are at a unique point in time, where public and private sector 
interests are at an all-time high in two key areas: improving the 
quality and safety of healthcare and moving forward on a health 
information technology agenda. Approaching these two key issue areas in 
a siloed manner--without strong integration across both areas--will 
result in missed opportunities, unintended consequences, and possibly 
reduced impact in both areas. By laying out an integrated, incremental 
strategy, which incorporates goals related to quality, safety, and 
efficiency as well as health information technology and the 
mobilization of data across organizations, the principles and Framework 
included in this document offer the foundation for building a 
healthcare system that is safer, of higher quality, and more effective 
and efficient. In addition to offering guidance to stakeholders 
involved in these two areas of interest, it also develops a framework 
for dialogue regarding how incentive programs can be designed for 
integration.
    Over the coming months, the eHealth Initiative and its Foundation 
will work closely with all key stakeholders--including practicing 
clinicians, purchasers, health plans, hospitals, healthcare IT 
suppliers, consumer groups, policymakers at the national and state 
level, and other key constituencies, as well as other non-profit and 
government groups focusing in this area--to further develop the 
Framework and principles, test their effectiveness in markets across 
the United States, and widely disseminate their results to build 
awareness and support implementation.
                                 ______
                                 
                           American Osteopathic Association
                                      Washington, DC, June 27, 2005
Hon. John Ensign,
Chairman,
Senate Subcommittee on Technology, Innovation, and Competitiveness,
Commerce, Science, and Transportation Committee,
Washington, DC.

Dear Chairman Ensign:

    As President of the American Osteopathic Association (AOA), I want 
to thank you for conducting a hearing to explore the value of health 
information technology (HIT) in improving the safety, quality, and 
efficiency of the health care delivery system. The AOA, which 
represents the Nation's 54,000 osteopathic physicians practicing in 23 
specialties and subspecialties, extends its sincere gratitude to you 
for your leadership on this important issue.
    Osteopathic physicians provide care to millions of patients each 
year. Care ranges from basic office visits to complex procedures. As an 
organization and individual physicians, we continually strive to 
improve the safety, quality, and efficiency of care provided. HIT has 
the potential, if developed and implemented with the patient-physician 
relationship as a core component, to be an invaluable tool in a 
physician's arsenal of care. The AOA remains committed to advancing the 
development of HIT.
    In December 2003, President Bush signed the ``Medicare Prescription 
Drug, Improvement, and Modernization Act of 2003'' (MMA) (Pub. L. 108-
173) into law. The Act, which contained electronic prescribing (e-Rx) 
provisions, served as a catalyst for efforts to develop and utilize 
technologies to improve the delivery of health care. Since enactment of 
Pub. L. 108-173, rapid development and adoption of HIT has been 
advanced through Congressional activities such as hearings and the 
introduction of legislation, the creation of the Office of the National 
Coordinator for Health Information Technology (ONCHIT), and other 
regulatory activities. Additionally, the private sector and physician 
organizations have undertaken activities aimed at fostering the 
development and implementation of HIT. It is paramount that all 
stakeholders remain involved in the dialogue.
    There are numerous parties driving the development of HIT. Overall 
success will be contingent upon the interoperability and functionality 
of systems put in place. Efforts must be advanced to ensure that 
software and hardware used throughout the healthcare system are 
interoperable. There is no benefit to be found in the utilization of 
systems unable to communicate with others. Systems developed and 
implemented must not compromise the essential patient-physician 
relationship. Medical decisions must remain in the hands of physicians 
and their patients.
    The AOA appreciates the potential benefits provided by the adoption 
of HIT. We remain committed to advancing the utilization of technology 
in the practice of medicine. However, we urge a moderated approach to 
ensure measures do not create unintended consequences. There are 
various issues that must be addressed to allow for the successful 
adoption of HIT. To this end, existing Federal regulations and laws 
should be reviewed to ensure they do not serve as impediments to the 
adoption and utilization of technology in the healthcare delivery 
system. In addition, attention must be paid to costs associated with 
acquiring and maintaining HIT. These concerns are compounded in small 
practices and rural and underserved areas where physicians are unable 
to benefit from economies of scale and infrastructure may present 
additional hurdles. Furthermore, patient confidentiality must be 
protected at all levels. If done with careful deliberation and 
consideration for the various issues that arise with creation of 
standards and implementation, HIT has the potential to be a driving 
force in enhancing the safety, quality, and efficiency of the 
healthcare delivery system.
    The AOA will continue to work with Congress, regulatory bodies, and 
other interested parties to ensure patients continue to benefit from 
the development and implementation of HIT systems. On behalf of my 
fellow osteopathic physicians, thank you for conducting this important 
hearing. The AOA applauds your commitment to advancing the utilization 
of health information technology. Please do not hesitate to call upon 
the AOA or our members for assistance on this and other health care 
issues.
        Sincerely,
                                       George Thomas, D.O.,
                                                         President.
                                 ______
                                 
   Prepared Statement of the Institute of Electrical and Electronics 
             Engineers--United States of America (IEEE-USA)

    IEEE-USA and its Medical Technology Policy Committee commends the 
Subcommittee on Technology, Innovation, and Competitiveness for 
examining how information technology can be applied in the medical 
industry to reduce medical errors, lower healthcare costs and improve 
the quality of patient care. We are pleased to offer the following 
statement for the June 30 hearing record.
    IEEE-USA supports the advancement of eHealth and its potential of 
providing improved information flows. We believe that promoting the 
common use of information technologies across the Nation to reduce 
medical errors and delineate quality metrics of health information, 
combined with interoperability and standards adoption, can lower costs 
and improve outcomes. In addition, national health threats--such as 
biological, chemical and nuclear terrorist attacks--require uses of 
these technologies for purposes of detection planning, preparedness and 
response.
    eHealth needs to be approached recognizing the needs of patients 
and implemented with consumer approaches that have been successful in 
other economic sectors. These approaches range from language usability 
to rating systems that will aid purchasers in the determination of 
quality. We support implementation of technology to promote patient 
health, but understand that without clear guidelines, standards and the 
removal of barriers such as syntactic and semantic interoperability and 
privacy, security and confidentiality concerns, the goal will remain 
elusive.
    Major goals for improving the health care system in the U.S. are 
improving patient safety including reducing errors; improving the 
interoperability of health information systems; and improving the 
capability for exchanging patient information while increasing the 
effectiveness and containing costs. Federal reimbursement policies need 
to reflect the contributions of information technologies for improving 
the quality of the healthcare system.
    The balance of this statement offers our recommendations on three 
related subjects: how to build the National Health Information Network 
with an appropriate emphasis on security and privacy, the use of 
voluntary health care identifiers, and appropriate roles for government 
in promoting the development of home healthcare technologies.

Building the National Health Information Network
    IEEE-USA advocates transitioning from our current state of 
disconnected health information systems to a National Health 
Information Network (NHIN) that would make use of leading-edge 
networking technologies, such as web services, mobile communications, 
and multimedia communications to provide secure and reliable transport 
of healthcare information. To that end, IEEE-USA makes the following 
recommendations to the Department of Health and Human Services, the 
Office of the National Coordinator for Health Information Technology, 
legislators, administrators and healthcare regulators:

        1. Transition to the desired National Health Information 
        Network should be accomplished by building upon existing 
        systems by increasing the reliability, availability and 
        security of these networks. To the extent feasible, the NHIN 
        should support appropriate authorization for access to the 
        distributed nature of health information where it currently 
        resides. It should not rely upon developing and maintaining 
        new, government-controlled, centralized databases or personal 
        health information repositories.

        2. Economic policies covering provider expense for transition 
        to the National Health Information Network and adopting an 
        electronic health record should be favorably designed to 
        facilitate provider conversion.

        3. Development of the National Health Information Network 
        should not compromise the security and privacy of personally-
        identifiable health information, as currently defined in the 
        HIPAA Privacy and Security Final Rules.

        4. Use of the National Health Information Network should adhere 
        to the guidelines on use of genetic information cited in IEEE-
        USA's position statement on ``Non-discrimination in Employment 
        Based on Genetic and Other Health Information,'' August 2002.

        5. The National Health Information Network should implement the 
        capability to provide public warnings about bio-terrorism, 
        epidemic disease, safety and efficacy of vaccines, etc.

        6. The National Health Information Network should encourage 
        patient access to medical records and establish ``cradle to 
        grave'' longitudinal medical records.

        7. The standard of such ``cradle to grave'' records should not 
        be restricted to data pertinent to acute care settings, and 
        should include key data fields from long-term care's minimum 
        data set to make such records useful throughout the different 
        care settings, including long-term care.

        8. The National Health Information Network should develop and 
        implement metrics to document the costs, benefits and 
        unintended favorable and adverse impacts of sharing healthcare 
        information and electronic health records.

        9. The NHIN should support Federal and state government public 
        health surveillance activities--relative to reportable 
        diseases, health conditions, injuries and risk factors. It 
        should enable these respective public health authorities to 
        secure necessary statistical data by providing a direct means 
        by which they could trace the reports back to individual health 
        providers, and an indirect means by which individual patients 
        could be contacted, if needed, for epidemiologic investigation.

        10. The National Health Information Network should be 
        supportive of quality control efforts at institutional, state 
        and national levels by having a means by which quality control 
        staff at all three levels can obtain appropriate authorization 
        to access current statistical data for comparison with like 
        facilities, baselines and benchmarks.

        11. The NHIN should have a provision so that appropriately 
        authorized persons in academic and governmental settings can 
        access detailed statistical data for research purposes.

        12. The NHIN should support individually-specifiable privacy 
        preferences for all healthcare consumers. It should include 
        provisions so that patients could indicate their willingness or 
        unwillingness to be solicited as subjects of medical research 
        by authorized investigators from academic and governmental 
        agencies.

    Development of a National Health Information Network would require 
a joint effort by Federal, state and local governments and the private 
sector. Working jointly would increase interoperability, reduce risk, 
and ensure that a competitive market existed for products intended for 
producing healthcare services in a networked environment. However, 
creating a NHIN also creates new requirements for reliability, 
availability and maintaining healthcare information privacy and 
security.
    For additional information, see IEEE-USA's position statement on 
the National Health Information Network, with emphasis on Security and 
Privacy Issues at: http://www.ieeeusa.org/policy/positions/NHIN.asp.

Use of Voluntary Healthcare Identifiers
    IEEE-USA believes that the use of voluntary healthcare identifiers 
can significantly enhance healthcare efficiency and patient safety. 
Consistent with the framework of the HIPAA legislation, IEEE-USA 
recommends that legislators and regulators develop and implement 
policies to create a Voluntary Healthcare Identifier Program and 
establish demonstration projects to document these benefits.
    Policies needed to facilitate adoption include:

   Congressional authority and resources for the Department of 
        Health and Human Services and the National Committee on Health 
        and Vital Statistics to develop and maintain a Voluntary 
        Healthcare Identifier System;

   Strong penalties, including monetary, civil and criminal for 
        privacy and security abuses;

   Safeguards against current or future unintended use of the 
        information; and

   Incentives for healthcare stakeholders to encourage adoption 
        of Voluntary Healthcare Identifiers.

    For additional information, see IEEE-USA's position statement on 
the Voluntary Healthcare Identifier at: http://www.ieeeusa.org/policy/
positions/healthcare
identifier.html.

Promoting Development of Home Healthcare Technologies
    IEEE-USA urges Congress and policymakers, in both the public and 
the private sector, to take the actions needed to expand uses for 
electronic devices, assistive and monitoring software, and home health 
communication technologies to provide home health care to those in 
need. Further, we support developing guidelines for reimbursement of 
these technologies--both for developers and users.
    IEEE-USA believes that using electronic technologies to assist and 
monitor elderly, disabled, and chronically ill individuals in the home 
can improve quality of life, improve health outcomes, and help control 
health care costs.
    Accordingly, IEEE-USA supports:

   Public and private sector research on the effectiveness, 
        cost-efficiency, and potential return on investment for each 
        class of home care technology; and research on how such 
        technological innovations can best be integrated into a 
        comprehensive package for home health care.

   Tax incentives to stimulate research, development and 
        deployment of home care technologies.

   U.S. Department of Health and Human Services' Centers for 
        Medicare and Medicaid Services action to streamline and 
        expedite exemption, clearance and approval processes for home 
        care technologies. Reimbursement should not be limited to U.S. 
        Food and Drug Administration approved devices.

   Medicare and other health insurance carrier action to 
        provide reimbursement for home care technologies that meet 
        specified qualifications (see Background).

    For additional information, see IEEE-USA's position statement on 
home healthcare technologies at: http://www.ieeeusa.org/policy/
positions/health
technologies.asp.

Conclusion
    IEEE-USA strongly believes that implementation of information 
technologies into the national healthcare infrastructure will advance 
clinical care, drive economic efficiencies, facilitate the linkage of 
fragmented systems and provide consumers access to information by which 
they can better understand and address their own healthcare needs.
    Policy barriers, implementation impediments and funding limitations 
have slowed or limited adoption by healthcare stakeholders of complex 
information databases, electronic medical records and advanced 
communication technologies. At times the barriers have seemed 
impenetrable, but with the current attention of Congress, the White 
House, the Department of Health and Human Services, regulators and 
private industry, we are hopeful progress can be made.
    IEEE-USA is an organizational unit of the IEEE. It was created in 
1973 to advance the public good and promote the careers and public 
policy interests of the more than 220,000 technology professionals who 
are U.S. members of the IEEE. The IEEE is the world's largest technical 
professional society. For more information, go to http://
www.ieeeusa.org.
                                 ______
                                 
                                                  CRF, Inc.
                                          Waltham, MA, July 7, 2005
Hon. John Ensign,
Chairman,
Senate Subcommittee on Technology, Innovation, and Competitiveness,
Commerce, Science, and Transportation Committee,
Washington, DC.

Senator Ensign,

    I am writing regarding the Commerce Committee's Subcommittee on 
Technology, Innovation, and Competitiveness recent hearing on ``eHealth 
Initiatives.'' We at CRF, Inc. are pleased that your Subcommittee has 
devoted the time and attention to this important topic. Upgrading 
America's healthcare system will require a thorough understanding of 
the technologies that exist to improve patient health and safety. The 
distinguished panel of witnesses addressed many of these issues. 
However, as often happens, the discussion focused almost exclusively on 
electronic health records. While electronic health records are an 
important part of a 21st century healthcare system, there are other 
important technologies to consider as well, such as electronic patient 
diaries.
    Electronic patient diaries (eDiaries) are handheld devices used 
primarily in clinical trials to exchange information between patients 
and clinical teams. These devices make it easier for patients to report 
on their health over the course of a clinical trial and play a critical 
role in increasing the reliability and safety of clinical drug trials, 
assuring that high-quality drugs make it on the market in timely 
manner. .
    Currently, many clinical studies are conducted with paper diaries, 
where patients record their experiences with a medication by hand each 
day. There are numerous problems involved with using paper diaries in 
drug trials including a low rate of patient compliance, which has 
serious implications on the reliability and accuracy of clinical trial 
data. Traditional paper diaries have compliance rates of 11 percent to 
60 percent as measured by when the patient entered the data versus when 
they should have entered the data. In contrast, eDiaries have very high 
rates of compliance--over 90 percent in most cases. Furthermore, the 
comfort level patients have with eDiaries leads to regular data entry, 
resulting in a strong level of consistency in electronic information 
and more valid trial results.
    Recent drug recalls have illustrated all too well the risks 
involved with unreliable or inaccurate trial data. In addition to 
offering far superior compliance rates, eDiaries provide real-time 
patient monitoring, which allows the immediate identification of 
dangerous side effects. eDiaries directly benefit patients and the 
American public by ensuring safe and efficient clinical trials.
    eDiaries have been proven to make a tremendous difference in data 
accuracy, trial safety and efficiency, which clearly impacts the 
findings of clinical trials as well as has positive implications for 
the final drug product. eDiaries also are providing an easy-to-use, 
cost-effective means to capture important patient health information 
and enable timely sharing and communication between patients and their 
physicians.
    CRF, Inc. is the market leader in eDiaries, providing diaries to 13 
of the top 20 pharmaceutical companies and connecting more than 100,000 
patients across 58 countries and in 48 languages. In any future eHealth 
endeavors, we would welcome the opportunity to be a resource for your 
office. If you have questions about electronic patient diaries or CRF's 
work, please do not hesitate to contact us.
        Sincerely,
                                              Pam McNamara,
                                           Chief Executive Officer.
                                 ______
                                 
Prepared Statement of Dr. Rose Marie Robertson, Chief Science Officer, 
   The American Heart Association; Professor of Medicine, Vanderbilt 
                       University Medical Center

    My name is Rose Marie Robertson, and I am a cardiologist, a 
Professor of Medicine, and the Chief Science Officer of the American 
Heart Association. On behalf of the American Heart Association and its 
more than 22 million volunteers and supporters, I am pleased to submit 
this statement for the hearing record. We wish to thank the Senate 
Committee on Commerce, Science, and Transportation Subcommittee on 
Technology, Innovation, and Competitiveness for the opportunity to 
submit written testimony regarding the importance of health information 
technology and Congress' potential role in promoting and supporting 
health information technology initiatives.

Overview
    Since 1924, the American Heart Association has dedicated itself to 
reducing disability and death from cardiovascular diseases, including 
stroke, through research, education and advocacy. Providing widespread 
access to effective, credible scientific information is vital to our 
mission. The American Heart Association and the American Stroke 
Association, a division of the American Heart Association, actively 
participate in efforts to improve the delivery of cardiovascular health 
care by promulgating scientifically-based standards and guidelines, 
sponsoring and overseeing clinical research, publishing peer-reviewed 
journals, and researching and developing programs to assist providers 
and patients.
    Two forms of cardiovascular disease, heart disease and stroke, are 
the first and third leading causes of death in the United States. Some 
60 million Americans--about one in five--suffer from some form of 
cardiovascular disease, ranging from high blood pressure to myocardial 
infarction, angina pectoris, stroke, congenital vascular defects and 
congestive heart failure. The estimated annual direct and indirect cost 
to the Nation of these diseases is approximately $400 billion.
    The use of health information technology presents a number of 
important opportunities to improve the lives of Americans by enhancing 
their access to efficient and appropriate health care services for the 
prevention, diagnosis and treatment of cardiovascular diseases, 
including stroke.

Health Information Technology Can Address Barriers to Care
    Although the United States health care system is among the best in 
the world, a number of researchers--including those at the Institutes 
of Medicine (IOM) and the U.S. Department of Health and Human Services' 
Agency for Healthcare Research and Quality (AHRQ)--have documented 
serious shortcomings in our Nation's health care system.
    Important concerns exist regarding the fragmented nature of our 
health care system and the resulting barriers to effective 
communication among the various providers who treat each patient. For a 
multitude of reasons, patients often do not receive the full scope and 
level of recommended care that is well-described in the existing 
clinical literature and the national treatment guidelines for 
cardiovascular disease, stroke and other serious diseases.
    In its March 2005 report to Congress, the Medicare Payment Advisory 
Commission (MedPAC) echoed many of the concerns raised by IOM, AHRQ, 
and others about the these serious shortcomings in our health care 
system. In their report, MedPAC highlighted the important role that 
health information technology systems can play in improving health 
care. Too often, the strategies and services that we know will improve 
patient outcomes (including such basic interventions as treating high 
blood pressure to goal levels) are not being translated into the day-
to-day lives of patients in the United States.

Potential Solutions Through Health Information Technology
    Wider use of health information technology systems is critical to 
the improvement and success of our Nation's health care system, and 
ultimately, ensuring improved health outcomes for Americans. Health 
information technology is already helping to improve the efficiency of 
the health care system and to ensure that providers have comprehensive 
and up-to-date clinical records to facilitate their clinical decision-
making. Health information technology is providing powerful tools to 
help improve health care efficiencies by connecting providers and 
facilitating the coordination of care.
    Health information technology also has the potential to improve 
patient care by incorporating tools that support and assist providers 
in making clinical decisions. Such clinical decision support tools 
integrate state-of-the-art clinical knowledge and practice guidelines 
with patient-specific clinical information.
    We applaud the Subcommittee's interest in health information 
technology. To further innovation and significantly improve the 
delivery of health care, we urge the Subcommittee to consider 
legislative proposals that facilitate the adoption of health 
information technology and that include provisions fostering the 
integration of clinical decision support tools into this technology.
    Properly designed clinical decision support tools can provide many 
benefits to providers and their patients. Such tools can provide 
physicians and other health care professionals with the ability to 
review relevant patient data in ``real time'' with integrated prompts 
that reflect well-established treatment guidelines for patients. These 
programs do not dictate physician practice, but rather assist 
physicians and other providers in remembering and considering the 
clinical options that are most likely to be of proven benefit. In 
addition, such tools can provide a continuous quality improvement 
function, which can allow providers to compare their improvements in 
achieving performance measures over time and to compare their 
performance against averages for providers of similar size and 
resources. Finally, such tools can facilitate communications between 
the various providers who care for each patient.
    One successful example of a clinical decision support tool is Get 
With the Guidelines, a program developed by the American Heart 
Association and in use by over 800 hospitals today. \1\
---------------------------------------------------------------------------
    \1\ Honore T. American Heart Association's hospital-based quality 
improvement program receives award from Health and Human Services 
Secretary Tommy Thompson. AHA News. 2004 (December 13, 2004).

   Get With The Guidelines provides integrated, real-time 
        prompts based on the American Heart Association's scientific 
        guidelines. These prompts remind physicians and other members 
        of the care team, in real time, of specific, evidence-based 
        treatment interventions to consider as they review each 
        patient's clinical information and develop a treatment plan 
---------------------------------------------------------------------------
        prior to hospital discharge.

   Get With The Guidelines also supports continuous quality 
        improvement activities that allow providers to compare current 
        treatment data against both their own past performance and 
        aggregate benchmarks from other providers.

    As demonstrated in the clinical literature, the combination of 
these functions results in significantly improved patient care and 
outcomes. \2\ \3\ \4\
---------------------------------------------------------------------------
    \2\ LaBresh KA, Ellrodt AG, Gliklich R, Liljestrand J, Peto R. Get 
With The Guidelines for cardiovascular secondary prevention: pilot 
results. Archives Internal Medicine. 2004;164:203-209.
    \3\ Berthiaume JT, Tyler PA, Ng-Osorio J, LaBresh KA. Aligning 
financial incentives with ``Get With The Guidelines'' to improve 
cardiovascular care. The American Journal of Managed Care. 2004;10:501-
504.
    \4\ LaBresh KA, Gliklich R, Liljestrand J, Peto R, Ellrodt AG. 
Using ``Get With The Guidelines'' to improve cardiovascular secondary 
prevention. Joint Commission Journal on Quality and Safety. 
2003;29:539-550.
---------------------------------------------------------------------------
    The United States has reached a critical point in the formation and 
implementation of health information technology initiatives. We commend 
this Subcommittee for its foresight in investigating potential 
initiatives and opportunities to foster health information technology 
development.
    At this critical juncture, we urge the Subcommittee and Congress to 
ensure that the momentum and innovation in the health information 
technology area continues to accelerate, resulting in widespread use of 
health information technology. Nonetheless, it is imperative that the 
Congress find ways to minimize the burden of such systems on providers, 
especially small providers and those institutions caring for low-income 
patients.
    The American Heart Association has enthusiastically endorsed the 
Health Information Technology Act of 2005, S. 1227, introduced by 
Senators Snowe and Stabenow and the Better Healthcare Through 
Information Technology Act of 2005, S. 1355, introduced by Senators 
Enzi and Kennedy. These bills include grant programs and other 
initiatives that would promote investment in health information 
technology programs. These bills also include provisions that would 
foster the integration and use of meaningful clinical decision support 
tools within health information technology systems.

Conclusion
    On behalf of the millions of American Heart Association 
professionals, volunteers and donors, I sincerely thank the 
Subcommittee for its interest in health information technology systems. 
The innovative use of health information technology has the ability to 
dramatically improve the health outcomes of Americans, including those 
with heart disease and stroke--the number one and number three causes 
of death among Americans.
    As Congress considers initiatives to develop and implement 
innovative health information technology, we urge you to promote 
systems that take full advantage of the tools that health information 
technology can support, including clinical decision support tools. 
Integration of patient-specific clinical data with well-established 
treatment guidelines and ongoing continuous quality improvement 
functions are essential to ensuring that these systems reach their full 
potential in providing effective assistance to physicians and other 
providers.
                                 ______
                                 
  Prepared Statement of the Pharmaceutical Care Management Association

Introduction

    PCMA is the national association representing America's 
pharmaceutical benefit managers (PBMs). PCMA represents both 
independent, stand-alone PBMs and health plans' PBM subsidiaries. 
Together, PCMA member companies administer prescription drug plans that 
provide access to safe, effective, and affordable prescription drugs 
for more than 200 million Americans in private and public health care 
programs. PCMA appreciates the opportunity to submit testimony.
    PCMA strongly supports the role health information technology can 
play in ensuring patient safety, reducing costs and creating a more 
efficient health care system. As leaders in developing workable 
information technologies for pharmacy benefits, PBMs have developed 
sophisticated systems for allowing real time fulfillment of 
prescriptions at the pharmacy counter and drug utilization review 
systems that notify pharmacists of potential drug to drug interactions 
based upon an individual's medication history. PBMs combine these 
technologies in ePrescribing so doctors can directly link to a pharmacy 
and purchaser without the need of a pen and pad.

Value of ePrescribing
    In the 2004 eHealth initiative report titled ``Electronic 
Prescribing: Toward Maximum Value and Rapid Adoption'' it is stated 
that Americans made more then 823 million visits to physicians' offices 
in 2000 and, according to the National Association of Chain Drug Stores 
(NACDS), four out of five patients who visit a doctor leave with at 
least one prescription. More than 3 billion prescriptions are written, 
and prescription medications are used by 65 percent of the U.S. public 
in a given year. The study goes on to state that 25 percent of patients 
who received at least one prescription reported an adverse drug event, 
and 39 percent of these events were deemed either ameliorable or 
preventable.
    Electronic prescribing can help prevent medication errors because 
it instantly connects the health care provider, the pharmacy, and the 
payers. Patient medication history and insurance information can be 
available for the physician when prescribing and, at the pharmacy, each 
prescription can be checked electronically for dosage, interactions 
with other medications, and therapeutic duplication. Patient safety can 
also be improved through avoiding hard-to-read physician handwriting 
and by automating the process for determining drug interactions and 
allergies.
    Eprescribing can also improve efficiency and reduce costs by 
providing information about the formulary, including lower-cost 
generics, and co-pay information. It can help ensure that patients and 
health professionals have the best and latest medical information at 
hand when they make important decisions about medicines, helping 
patients get the most benefits at the lowest cost. In addition, 
eprescribing shows promise in creating efficiencies in the physician's 
office and the pharmacy. This can be done by reducing the costs 
associated with patient eligibility checks and creating timely 
interfaces with formularie s to make sure the correct drug is 
prescribed the first time.

One Uniform Eprescribing Standard
    PCMA believes that creating unified eprescribing standards through 
appropriate and full preemption of state laws is a critical component 
to the ultimate success of health IT initiatives, including 
eprescribing. State laws and regulations, if they deal with 
eprescribing, tend to make the eprescribing process less efficient, or 
even illegal, and therefore not likely to be utilized by payors, 
physicians and pharmacists. [See Attachment] The National Association 
of Boards of Pharmacy (NABP) model act states that electronic 
prescriptions must be transmitted directly to the pharmacy ``with no 
intervening person or third party having access to the prescription 
drug order.'' For those states that have adopted this language, this 
would mean that electronic prescriptions that convey any formulary 
information or comprehensive medication history would not be allowed.
    With the increased attention on the value information technology 
(IT) can provide the health care system, policymakers are becoming more 
familiar with the barriers that exist to broad health IT adoption. An 
often noted barrier to adoption is the possibility of numerous, 
disjointed standards that directly impact how these systems will work 
in the practice setting.
    In fact, the Department of Health and Human Services (HHS) press 
release in announcing the release of this proposed rule stated, ``The 
current lack of common standards is a barrier to the use of health 
information technology, including eprescribing.'' \1\ Also, HHS stated 
in its Goals for a Strategic Framework for Health IT adoption ``the 
government has made a commitment to using common standards and 
architecture . . . The result will be a more cost-effective and 
efficient healthcare system.'' \2\
---------------------------------------------------------------------------
    \1\ ``Eprescribing proposed rule,'' Department of Health and Human 
Services--Press Release.
    \2\ ``Goals of Strategic Framework.'' Department of Health and 
Human Services, Office of the National Coordinator for Health 
Information Technology (ONCHIT).
---------------------------------------------------------------------------
    The GAO has identified in its 2004 report, ``HHS Efforts to Promote 
Health Information Technology and Legal Barriers to Its Adoption,'' 
specific barriers to adopting health IT include financial, technical, 
and cultural aspects. Technical barriers, including a ``lack of uniform 
standards for data submission and reporting'' clearly show that a 
uniform standard is critical for the Federal Government to reduce or 
eliminate as many barriers to adoption as possible.

Medicare Part D Eprescribing
    The Centers for Medicare and Medicaid Services (CMS) issued an NPRM 
to establish foundation standards for eprescribing that are expected to 
go into effect at the start of the Part D program in 2006. \3\ All 
health plans and drug plans must support eprescribing although 
providers are not required to use eprescribing.
---------------------------------------------------------------------------
    \3\ 70 FR 6256-6274.
---------------------------------------------------------------------------
    The Medicare established eprescribing standards should be adopted 
in a manner that does not require a standard-by-standard evaluation to 
determine which individual state standard may or may not be preempted. 
This would create a burdensome review to compare the Medicare standards 
to that of each relevant state law and regulation to determine where 
Medicare has created a standard and where it has not.
    We believe CMS has the authority necessary to govern all electronic 
prescription of any drugs included in the Part D program, so as to 
ensure a single, national electronic prescription drug program that 
would be adopted and used consistently by prescribers to the benefit of 
Medicare and the rest of the health care system.
    Examples of state eprescribing laws or regulations that are 
burdensome include: requiring a fax or hard copy to follow an 
ePrescription, prohibiting specific scheduled drugs, and prohibiting 
interstate transmission of prescriptions.
    With a large focus of resources and time needed by all partners in 
the eprescribing system to overcome the obvious challenges of 
prescriber start-up costs and broad education about the value 
proposition of eprescribing, it is critical that the standards and 
processes that make the technology function not add to this formidable 
challenge.
    In conclusion, we look forward to working with the Committee on a 
common goal of an interoperable health information technology system, 
particularly eprescribing, that can fully realize the benefits to 
patients and the health care system.
2003-2004 National Association of Boards of Pharmacy Survey of Pharmacy 
        Law

                      XXII. Electronic Transmission of Prescriptions: Computer-to-Computer
----------------------------------------------------------------------------------------------------------------
                   Is Prescription    Is Prescription                       Is Prescription       Does Board
                  Transmission from  Transmission from   Is Prescription   Transfer from Out-      Recognize
                       In-state         Out-of-State    Transfer  Between  of-state Pharmacy      Electronic
      State           Prescriber         Prescriber          In-state       Computer to In-   signatures for Non-
                     Computer to        Computer to          Pharmacy       state  Pharmacy       controlled
                  Pharmacy Computer  Pharmacy Computer      Computers           Computer           Substance
                       Allowed?           Allowed?           Allowed?           Allowed?        Prescriptions?
----------------------------------------------------------------------------------------------------------------
Alabama           Yes I              Yes I              Yes                Yes                No
Alaska            Not  addressed     Not  addressed     Not  addressed     Not  addressed     No
Arizona           Not  addressed     Not  addressed     Yes G              Yes G              Yes E
Arkansas          Yes                Yes                Yes                Yes                No
California        Yes                Yes                Yes                Yes                No
Colorado          Yes I              Yes I              Yes I, M           Yes I, M           Yes
Connecticut       Yes D, S           Yes D, S           Yes S              Yes S              Yes
Delaware          Yes                Yes                Yes F              Yes F              Yes
District of       No                 No                 No                 No                 No
 Columbia
Florida           Yes                Yes                Yes                Yes                Yes
Georgia           No                 No                 Yes F              Yes F              No
Guam              Not  addressed E   Not  addressed E   Not  addressed E   Not  addressed E   Not  addressed E
Hawaii            Yes W              Yes W              Yes W              Yes W              Yes W
Idaho             No                 No                 Yes F              Yes F              Yes
Illinois          Yes                Yes H              Yes M              Yes M              Yes S
Indiana           H                  H                  Yes                Yes                ----
Iowa              Yes Y              Yes Y              Yes B, F, M        Yes B, F, M        Yes L
Kansas            Yes                Yes                Yes                Yes                Yes
Kentucky          Yes I              Yes I              Yes K              Yes K              Yes
Louisiana         Yes                Yes                Yes B              Yes B              Yes
Maine             No                 No                 Yes F              Yes F              No
Maryland          Yes                Yes                Yes M              Yes M              Yes J
Massachusetts     Yes N              Yes N              Yes N              Yes N              No
Michigan          Yes                Yes O              No                 No                 Yes
Minnesota         Yes                Yes                Yes                Yes                Yes
Mississippi       Yes                Yes                Yes                Yes                Not  addressed
Missouri          Yes                Yes                Yes                Yes                Yes A
Montana           Yes                Yes                Yes                Yes                Yes
Nebraska          Yes                Yes                Yes                Yes                No
Nevada            Yes T              Yes T              Yes                Yes                Yes
New Hampshire     Yes E              Yes E              Yes F, O           Yes F, O           Yes E
New Jersey        No                 No                 No                 No                 No
New Mexico        Yes Z              Yes Z              Yes S, X           Yes S, X           Yes
New York          Yes P              Yes P              Yes P              Yes P              Yes
North Carolina    Yes                Yes                Yes                Yes                Yes
North Dakota      Yes                Yes                No                 No                 Yes
Ohio              Yes R              Yes R              Yes M              Yes M              Yes R
Oklahoma          Yes (Guidelines)   Yes (Guidelines)   Yes                Yes                Yes
Oregon            Not  addressed     Not  addressed     Yes M              Yes M              E
Pennsylvania      Not  addressed C   Not  addressed C   Yes                Not  addressed     E
Puerto Rico       Not  addressed     Not  addressed     Not  addressed     Not  addressed     ----
Rhode Island      Not  addressed     Not  addressed     Yes F              Yes F              Not  addressed
South Carolina    Yes (Guidelines)   No                 Yes Q              No                 Yes
South Dakota      No                 No                 Yes F              Yes F              Yes E, AA
Tennessee         Yes                Yes                Yes                Yes                Yes
Texas             Yes I              Yes U              Yes                Yes U              No BB
Utah              No                 Not  addressed     No                 No                 Not  addressed
Vermont           Yes                Yes                Yes                Yes                Yes
Virginia          Yes                Yes                Yes V              Yes V              Yes
Washington        Yes                Yes                Yes N              Yes N              Yes
West Virginia     Yes S, T           Yes S, T           Yes S, T           Yes S, T           No
Wisconsin         Yes                Yes                Yes                Yes                Yes
Wyoming           Yes                Yes                Yes                Yes                Yes
----------------------------------------------------------------------------------------------------------------

LEGEND
        A--Electronic prescriptions recognized.
        B--Regulations require pharmacist to perform certain functions.
        C--Regulations are currently being considered and/or drafted.
        D--Exclusive access or direct lines not allowed.
        E--No rules at this time.
        F--Only by pharmacies with a common electronic file.
        G--Must comply with Rule R423-408.
        H--Not prohibited.
        I--No Schedule II substances allowed.
        J--With proper security precautions.
        K--Must fully comply with 201 KAR 2:165 and 21 CFR 1306.26, and 
        must be online, real-time transmission.
        L--Electronic signature defined as ``Confidential personalized 
        digital key, code, or number used for secure electronic data 
        transmissions, which identifies and authenticates the 
        signatory.''
        M--Must satisfy the requirements of state regulations for 
        prescription transferral. Stores that access the same records 
        electronically are not required to cancel the original 
        prescription.
        N--Prescriptions may be transmitted intrastate and interstate 
        from pharmacy to pharmacy. If controlled substances, DEA rules 
        must be followed.
        O--For non-controlled drugs.
        P--With assurances for confidentiality of the electronic 
        message. No controlled substances.
        Q--The transfer of prescription information for the purpose of 
        dispensing authorized refills is permissible between pharmacies 
        where all pharmacies are under common ownership and access 
        prescription information through a common computerized data 
        system, subject to subsection (G)(1)(c), (G)(2), (G)(6), 
        (G)(7), (G)(8), (G)(9), and (G)(10).
        R--Prescription not valid unless Board-approved system assures 
        that only authorized prescribers have issued the electronically 
        transmitted prescription.
        S--Electronic transmission of prescription requires same 
        verification as any oral or telephone prescription.
        T--No access to the prescription information can be made by 
        other than the practitioner and the pharmacy.
        U--For dangerous drugs only.
        V--Pharmacist to pharmacist ``real time'' communication of 
        information found on or with prescription hard copy.
        W--Under jurisdiction of Department of Health, Food and Drug 
        Branch.
        X--Only during normal business hours.
        Y--Specific rules regarding electronic transmission computer to 
        computer.
        Z--Must comply with 16.19.6.23 of Board regulations.
        AA--Allowed as long as pharmacist is satisfied with legitimacy 
        of signature.
        BB--Prescriber signature not required.
                                 ______
                                 
   Prepared Statement of the Advanced Medical Technology Association 
                               (AdvaMed)

    AdvaMed and its member companies would like to thank the Committee 
for holding this important hearing on health information technology 
(HIT). HIT promises to revolutionize the health care delivery system 
and have a dramatic effect on patient safety, quality of care, and 
efficiency. HIT products and applications are greatly expanding 
throughout vital sectors of the American health care delivery system, 
including clinical operations, decision support, devices, equipment, 
distribution, administrative tasks, and the interface with payers. As a 
result, HIT is helping to significantly reduce medical errors, improve 
the quality of care, speed paperwork, and reduce administrative costs.
    AdvaMed is the world's largest medical technology association 
representing manufacturers of medical devices, diagnostic products and 
medical information systems. AdvaMed's more than 1,300 members and 
subsidiaries manufacture nearly 90 percent of the $75 billion of health 
care technology purchased annually in the United States and more than 
50 percent of the $175 billion purchased annually around the world. 
Many of these technologies--such as electronic infusion pumps that 
administer intravenous (IV) drugs, verify correct drugs, and check 
dosages, as well as remote physiological monitoring (RPM) technology--
save lives and improve the quality of life for patients by preventing 
medication errors and managing disease.

The Role of Technology
    Universally interoperable electronic health record (EHR) holds 
great promise in reducing health care costs and improving the quality 
of care delivered to patients. The Department of Health and Human 
Services (HHS) cites two studies that estimate savings from 
implementing EHRs to be between $78 and $112 billion. HIT, however, is 
expanding far beyond the EHR to include devices that are already 
dramatically improving patient safety, quality of care and health care 
efficiencies. Combined, the EHR and these other innovative technologies 
will ultimately play a major role in reducing overall health care 
costs.
    The Advanced Medical Technology Association, AdvaMed, represents 
the innovators of these smart medical technologies. Examples of these 
innovations, which include:

    Records

   Application of computer-assisted physician order entry to 
        increase patient safety and health system efficiency.

   Personal digital assistants (PDAs), hand-held devices that 
        allow doctors making rounds to immediately access each 
        patient's complete medical record.

   Lab results that are stored and sent to physicians 
        electronically, which streamlines and speeds up testing and 
        retrieval.

   Pharmacies that are receiving electronic prescription orders 
        from physicians. Pharmacists are prevented from filling orders 
        if critical patient data is missing, potential adverse drug 
        interactions are flagged, and medication alerts are issued for 
        high-risk medications. The electronic record of all of this is 
        available in real time by any authorized health care provider.

    Devices

   Infusion pumps that are preventing drug overdoses and 
        enabling hospitals to re-engineer their systems to avoid 
        medical errors.

   Image-guided or computer-assisted surgery (CAS), which 
        allows surgeons to more precisely position their instruments 
        and to document the procedure. Procedures are shorter and less 
        invasive, and CAS appears to be improving quality of care and 
        reducing morbidity in some cases.

   Devices with computerized components such as implantable 
        cardioverter-defibrillators (ICDs), which allow heart patients 
        subject to life-threatening cardiac arrhythmias to send vital 
        data to their physicians via a secure Internet connection.

    Off-Site Monitoring and Communication

   Remote monitoring technologies that are eliminating trips to 
        the doctor and enabling improved monitoring of patients with 
        chronic diseases and improved monitoring of intensive care unit 
        (ICU) patients.

   Telemedicine to improve care, for instance, of both rural, 
        less accessible populations and urban populations.

   Picture archiving and communication (PAC) systems, which 
        store and permit the transmittal of radiological images such as 
        X-rays when and where they are most needed.

   Virtual patient visits via e-mail.

Improving Patient Safety
    The Institute of Medicine estimates that 44,000 to 98,000 deaths 
each year result from preventable medical errors in hospitals. Each 
year, hundreds of thousands of preventable adverse drug events also 
occur. Different studies find that there are errors in 24.9 percent of 
hospital patient records. \1\ Other estimates, including one from the 
Food and Drug Administration, indicate that as many as 372,000 
preventable adverse drug events occur each year. \2\ These errors 
result from administering incorrect dosages, errors in filling 
prescriptions, and adverse drug interactions.
---------------------------------------------------------------------------
    \1\ Terri Simmonds. ``Using The Trigger Tool to Detect Potential 
Harm in Medication Management.'' Infusion Safety: Addressing Harm with 
High-Risk Drug Administration. The ALARIS' Center for 
Medication Safety and Clinical Improvement. San Diego, California. 
2004, pp 10.
    \2\ Steven Tucker. ``Analysis of Impact of the Food and Drug 
Administration's Proposed Bar Code Label Requirements for Human Drug 
Products and Blood.'' Hospital Pharmacy. 38 (11), Supplement 1, pp S11.
---------------------------------------------------------------------------
    Recent studies on the impact of medical technology in reducing 
medical errors have targeted IV drug administration and computerized 
physician ordering systems. Technologies that support IV drug 
administration prevent medication errors using automated dosage limits 
and alerting systems. Electronic physician ordering systems and data 
management software reduce transcription and dosing errors, promote 
process standardization, increase access to patient-specific medical 
information, and reduce laboratory turnaround time.
Case Study: Computerized Physician Order Entry
    Late in 2003, the National Academies, the Nation's advisers on 
science, engineering and medicine, released a report that strongly 
recommended health care organizations adopt information technology 
systems capable of collecting and sharing health information about 
patients and their care. For some organizations, the first step may 
involve computerized physician order entry (CPOE), which links the 
health care worker with the facility's computer system to avert medical 
errors.
    CPOE can help physicians avoid errors because the doctor enters the 
prescription on the computer. For example, handwriting errors and 
missed decimal points should be a thing of the past. Also, a 
computerized system can automatically alert the practitioner to past 
drug allergies, potential drug interactions with medications the 
patient is already taking, and incorrect dosing.
    The 1999 Institute of Medicine (IOM) report, To Err is Human, 
estimates 7,000 deaths from medication errors alone each year. 
According to the Leapfrog Group for Patient Safety, more than a million 
serious medication errors occur each year in U.S. hospitals; Leapfrog 
estimates that computerizing prescriptions can reduce that number by 88 
percent. Two Journal of the American Medical Association studies 
concluded that about half of serious medication errors were the result 
of ordering errors. \3\ \4\ These included inappropriate medications 
for the patient's condition, an incorrect dosage considering the 
patient's physiological state, such as renal problems or age, and 
prescribing medications to which the patient was known to be allergic.
---------------------------------------------------------------------------
    \3\ Bates DW, Cullen DJ, Laird N et al. Incidence of adverse drug 
events and potential adverse drug events. Implications for prevention. 
ADE Prevention Study Group. JAMA 1995;274:29-34.
    \4\ Leape LL, Bates DW, Cullen DJ et al. Systems analysis of 
adverse drug events. ADE Prevention Study Group. JAMA 1995;274:35-43.
---------------------------------------------------------------------------
    Children's Hospital of Pittsburgh (Children's) launched 
Children'sNet in October 2002. Since pediatric hospitals have a special 
challenge with medication errors due to their patients' weights, POE 
seemed the logical first step toward the hospital's goal of achieving a 
completely electronic patient record.
    Besides reducing weight-related adverse drug events, Children's 
hoped CPOE would help in other areas. Health care regulatory bodies 
often require compliance with specific standards in order for the 
institution to reach certain benchmarks. Children's was challenged to 
reach compliance with these goals:

        1. Verbal orders had to be co-signed by physicians within 24 
        hours.

        2. Respiratory therapists had to complete documentation in the 
        patient's record.

        3. Physicians had to order nutrition screens.

    Children's built these into its CPOE so the system would prompt 
physicians or allied health professionals to address these concerns on 
the spot. Finally, physician surveys at Children's showed that the 
doctors were not happy with turn-around times for lab and diagnostic 
tests.
    The CPOE system at Children's consists of wireless computers on 
mobile carts that can travel on rounds with the physician. Doctors can 
show lab or diagnostic test results to parents at the child's bedside; 
a charting function easily enables doctors to graph progress. Of 
course, the calculator tool helps obtain a clear weight/dosing picture, 
and its warning system provides an alert if a dose seems out of line, 
based on predetermined standards.
    In addition to the mobile computers, each floor also accommodates 
four wall computers and, where possible, additional desktop computers. 
These provide ample opportunity for allied health professionals to 
complete their charts as well. As it completed its second year with 
CPOE:

   Children's has eradicated handwriting transcription errors 
        completely and cut harmful medication errors by 75 percent.

   By electronically requiring that a child's weight be entered 
        before a medication order may be placed, Children's virtually 
        eliminated weight-related adverse drug events.

   Both physician sign-off of verbal orders within 24 hours and 
        documentation by respiratory therapists have reached the 97 
        percent level. Physicians are now ordering nutrition screens 90 
        percent of the time.

   Physician satisfaction with response times for lab and 
        diagnostic test results is much better.

    Improving patient safety was Children's primary goal, but the 
hospital staff soon learned that patients benefit in a variety of ways:

   Clinicians are redirecting time previously spent on 
        administrative tasks to patient care.

   Clinicians have instantaneous and reliable access to 
        information that enables better patient care, including lab 
        tests, imaging results, and drug information.

    By enhancing the ability to provide better care, Children's has 
created a safer environment.
Improving the Quality of Care
    The concept of pay-for-performance is a growing trend as a way to 
reward health care providers who efficiently deliver quality care to 
their patients. Three types of measures are under consideration:

   Structural measures: Based on the infrastructure within 
        which the provider operates, such as whether or not he or she 
        uses electronic prescription order entry.

   Process measures: Based on adherence to accepted clinical 
        guidelines that improve care outcomes, such as prescribing beta 
        blockers to heart attack patients or successfully monitoring 
        and controlling high blood pressure or glucose levels.

   Outcome measures: Based on care outcomes that result in 
        reduced morbidity or mortality. In myriad ways, health 
        information technology both helps health care professionals 
        deliver quality of care to their patients and provides an 
        automatic way to measure that delivery for a variety of 
        assessment purposes, including pay-for-performance incentive 
        remuneration.

    Today's medical field is replete with illustrations of how HIT is 
improving the quality of care for American patients. Quality of care 
enhancers include remote patient monitoring, remote ICU oversight, 
cardiac and implantable device monitoring, mobile telemetry of hard-to-
diagnose heart arrhythmias, expanding telemedicine possibilities and 
decision support software that is helping physicians provide the right 
care.
Case Study: Remote Patient Monitoring Increases Quality of Care
    Remote patient monitoring (RPM) uses an electronic device in a 
patient's home to assist with disease management. The device collects 
data on the patient's condition and transmits analysis of those data to 
a care delivery service that uses those data to communicate with and 
monitor the patient. In addition, the devices can help providers 
analyze that data to refine and improve ongoing monitoring activities, 
make clinical diagnoses as necessary, and assess the need for 
treatment.
    With its ability to link patients to their doctors, remote patient 
monitoring also is a particularly useful and increasingly more 
important tool in providing rural health care. Patients typically use 
electronic home monitoring devices once a day to collect basic 
physiological data--such as weight, blood pressure, blood oxygen 
levels, and heart rate--and to answer specific questions about their 
condition. The patients' information is transmitted electronically to a 
central monitoring station, where the data is analyzed by nurses and 
care managers. These care managers can track early warning signs and 
symptoms and contact patients, providing feedback, education, and 
medication changes long before the patients need to be hospitalized.

Reducing Costs
    By reducing duplicative care, lowering health care administration 
costs and avoiding care errors, health information technology could 
save approximately $140 billion per year, according to HHS. That is 
close to 10 percent of total U.S. health care spending. Studies cited 
by HHS in its 2004 Health IT Strategic Framework Report suggest the use 
of EHRs can reduce laboratory and radiology test ordering by 9 percent 
to 14 percent, lower ancillary test charges by up to 8 percent, reduce 
hospital admissions ($16,000 average cost) by 2 percent, and reduce 
excess medication usage by 11 percent. Two studies have estimated that 
ambulatory EHRs have the potential to save all payers $78 billion to 
$112 billion annually. HHS also cites evidence that EHRs have the 
potential to reduce administrative inefficiency and paperwork.
    Depending on the HIT technology involved, near-term return on 
investment will vary in both time frames and resulting financial 
margins. However, studies to date suggest that in the long-term, as HHS 
notes, the economic benefits of HIT could be large.
    For example, a study in the New England Journal of Medicine \5\ 
concluded that both costs ($26,325 vs. $35,283) and length of stay (10 
days vs. 12.9 days) in an intensive care unit were reduced when the 
CPOE system included suggested advice regarding antibiotic ordering.
---------------------------------------------------------------------------
    \5\ Evans RS, Pestotnik SL, Classen DC, et al. A computer-assisted 
management program for antibiotics and other anti-infective agents. N 
Engl J Med. 1998;338:232-8.
---------------------------------------------------------------------------
    Besides improving clinical outcomes, using remote Intensivists 
(intensive care specialists) to monitor patients electronically from a 
remote location as part of an ICU telemedicine program to supplement 
in-house specialists also enhances hospital financial revenues, 
according to a 2004 study in Critical Care Medicine.\6\ Although ICU 
beds account for only 10 percent of total inpatient beds, the cost of 
caring for ICU patients can exceed 30 percent of total hospital costs. 
Due to this high cost of ICU care, improved clinical outcomes can 
theoretically offset the costs of superior care.
---------------------------------------------------------------------------
    \6\ Breslow MJ, Rosenfeld BA, Doerfler M, Burke G et al. Effect of 
a multiple-site intensive care unit telemedicine program on clinical 
and economic outcomes: An alternative paradigm for Intensivist 
staffing. Crit Care Med 2004;32:31-38.
---------------------------------------------------------------------------
    In the study, lower variable costs per case and higher hospital 
revenues (from increased case volumes) generated financial benefits in 
excess of program costs. Cost savings resulted both from a reduction in 
the average length of stay in the ICUs (3.63 days vs. 4.35 days) and 
from a decrease in daily costs. Both before and after the remote 
telemedicine program was instituted, the ICUs had high occupancy rates. 
But, the authors concluded, greater patient turnover during the 
supplemental Intensivist program generated additional contribution 
margins to the hospital.

Case Study: Digital Information System
    Picture archiving and communication systems (PACS) enable 
hospitals, imaging centers and multi-site health care organizations to 
manage, store and transmit patient medical images such as digital X-
ray, MRI and CR images. Access to these images is fast and easy. 
Combining this kind of technology with a digital patient information 
system can pay significant financial dividends. Such a system shared by 
several Boston-area hospitals reported saving an estimated $1 million 
annually by, in part, reducing the time spent searching for files and 
the time spent admitting patients. Projected annual income revenues 
from better patient retention as a result range between $3 million and 
$4 million.\7\
---------------------------------------------------------------------------
    \7\ Networking Health: Prescriptions for the Internet, Institute of 
Medicine, National Academy of Sciences, p. 81, 2000.
---------------------------------------------------------------------------
Call to Action: Policies That Foster HIT Adoption
    To assure appropriate access to life-saving and life-enhancing 
medical technologies for patients, AdvaMed believes that policies 
should continue to evolve with technology and transform into a system 
that supports technological advancement. AdvaMed supports developing 
incentives that will overcome the barriers to implementation and foster 
the timely adoption of these health information technologies (HIT). 
Providers, payers, and HIT/medical technology manufacturers will all 
have to address these barriers to enable interoperable, effective, and 
efficient use of these technologies to improve the quality of care, 
patient safety, and health outcomes overall.
    In order for the dream of interoperable health information 
technology to become a reality--for a universally accessible electronic 
health record to become as ubiquitous and as commonplace as financial 
ATM cards and supermarket ``courtesy'' cards--AdvaMed believes the 
following must occur:
    Regulatory Reform: Unless an exception is met, provisions of the 
Federal health care program anti-kickback statute prohibit the offer or 
acceptance of anything of value in return for patient or item/service 
referrals. Likewise, unless an exception is met, the physician self-
referral law (the ``Stark'' law) bars hospitals from billing for items 
or services provided by physicians who have financial relationships 
with the hospital. An exception to Stark has been promulgated by the 
Centers for Medicare and Medicaid Services for community-wide health 
information systems.
    The exception is not well defined or understood, however, and a 
much broader, clearer exception is needed to cure the obstacles 
presented by the Stark law. A parallel safe harbor to the Federal 
health care program and anti-kickback statute is also necessary. These 
barriers to the dissemination of resources (financial, equipment or 
otherwise), such as a hospital financially supporting its referring 
physicians in the acquisition and use of health information technology, 
must be removed.
    Without such reforms, these two laws represent huge obstacles that 
will have tremendous chilling effects on any efforts, no matter how 
broad, well financed, or well intentioned, to champion the use of HIT.
    Standards: The FDA is currently revising its software regulation 
policies. AdvaMed endorses the FDA's current policy, under which it 
only regulates software if its output directly results in software-
directed treatment or diagnosis of patients. We also believe that the 
FDA's regulation of any software associated with medical devices should 
be risk-based and only at the minimum level necessary to protect public 
health.
    As for the electronic health record (EHR), it is not a medical 
device; it stores data for retrieval by a health care professional. EHR 
algorithms do not make diagnostic or treatment decisions. Therefore, 
FDA regulation is not appropriate or warranted under the FDA's own 
standards.
    Financial Incentives: Many providers lack the financial ability or 
consistency of commitment required to make the up-front investment 
needed to install and operate an advanced health information technology 
system. Therefore, the Federal Government and other payers should 
provide financial incentives sufficient to spur widespread, rapid 
adoption of health information technology throughout the health care 
system, including universal adoption of electronic health records. 
``Pay-for-performance'' proposals should include incentives for 
adoption and use of health information technology.
    Direct Reimbursement: Reimbursement systems should reward new modes 
of providing services that result in quality improvement or cost 
reduction for patient care, e.g., remote patient monitoring, computer-
assisted surgery, imaging, telemedicine, and virtual physician visits.
    Quality and Safety Studies: Finally, the eHealth system should be 
designed to assure that data from the electronic medical record would 
be available, with appropriate privacy protections under HIPAA, for 
studies to improve patient safety and quality of care.
Conclusion
    Again, we thank the Committee for holding this hearing today and we 
appreciate the opportunity to submit testimony for the record. HIT 
holds great promise for improving patient safety, improving the quality 
of medical care, and increasing efficiency. While EHR is one of the 
many medical devices that can attain this goal, HIT is expanding far 
beyond this and dramatically improving patient safety, quality of care 
and health care efficiencies.
    Despite the existing and growing body of evidence that HIT will 
improve patient safety, enhance the quality of care, and increase 
efficiency of care provided, many barriers to adoption remain. 
Regulatory barriers like the Federal health care program anti-kickback 
statute and the ``Stark'' physician self-referral law remain an 
obstacle to widespread adoption of HIT. When clinical and 
interoperability standards are developed by Congress and the private 
sector, it is paramount to ensure that patients have access to new and 
innovative technologies. Financial barriers for health care providers 
to purchase and maintain HIT is a particular problem, especially for 
solo and small group practitioners.

                                  
