[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
 NOT WHAT THE DOCTOR ORDERED: BARRIERS TO HEALTH IT FOR SMALL MEDICAL 
                               PRACTICES

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

                                HEARING

                               before the

               SUBCOMMITTEE ON HEALTH CARE AND TECHNOLOGY

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD
                              JUNE 2, 2011

                               __________

                               [GRAPHIC] [TIFF OMITTED] TONGRESS.#13
                               

            Small Business Committee Document Number 112-019
              Available via the GPO Website: www.fdsys.gov


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                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BEUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                      Barry Pineles, Chief Counsel
                  Michael Day, Minority Staff Director


                            C O N T E N T S

Opening Statements:
                                                                   Page
    Ellmers, Hon. Renee..........................................     1
    Richmond, Hon. Cedric........................................     2
    Herrera Beutler, Hon. Jaime..................................     3

                               WITNESSES

Farzad Mostashari, M.D., Sc.M., National Coordinator for Health 
  Information Technology, U.S. Department of Health and Human 
  Services, Washington, DC.......................................     5
Ms. Karen Trudel, Acting Director, Office of E-Health Standards 
  and Services, Centers for Medicare and Medicaid Services, 
  Baltimore, MD..................................................     7
Sasha Kramer, M.D., Olympia, WA..................................    18
Denise Elliott, D.P.M., Marrero, LA..............................    20
Mr. Andrew Slavitt, Chief Executive Officer, OptumInsight, Eden 
  Prairie, MN....................................................    23
David L. Baumer, Ph.D., Professor of Law and Technology, North 
  Carolina State University, Raleigh, NC.........................    25

                                APPENDIX

Prepared Statements:
    Farzad Mostashari, M.D., Sc.M., National Coordinator for 
      Health Information Technology, U.S. Department of Health 
      and Human Services, Washington, DC.........................    32
    Ms. Karen Trudel, Acting Director, Office of E-Health 
      Standards and Services, Centers for Medicare and Medicaid 
      Services, Baltimore, MD....................................    50
    Sasha Kramer, M.D., Olympia, WA..............................    64
    Denise Elliott, D.P.M., Marrero, LA..........................    69
    Mr. Andrew Slavitt, Chief Executive Officer, OptumInsight, 
      Eden Prairie, MN...........................................    76
    David L. Baumer, Ph.D., Professor of Law and Technology, 
      North Carolina State University, Raleigh, NC...............    85
Questions for the Record:
    Ellmers, Hon. Renee for Ms. Karen Trudel.....................    92
    Ellmers, Hon. Renee for Dr. Farzad Mostashari................   105
Statements for the Record:
    The Computer Technology Industry Association.................   118
    The National Partnership for Women & Families................   123
Additional Materials for the Record:
    ``E-Prescribing Penalty Could Hit Up to 109,000 Clinicians'' 
      By: Robert Lowes, Medscape Medical News....................   126


 HEARING: NOT WHAT THE DOCTOR ORDERED: BARRIERS TO HEALTH IT FOR SMALL 
                           MEDICAL PRACTICES

                              ----------                              --
--------


                         THURSDAY, JUNE 2, 2011

                   House of Representatives
                       Committee on Small Business,
                  Subcommittee on Healthcare and Technology
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10 a.m., in room 
2360, Rayburn House Office Building. Hon. Renee Ellmers 
(chairwoman of the Subcommittee) presiding.
    Present: Representatives Ellmers, Herrera Beutler, Tipton, 
Hanna, Richmond, Altmire.
    Chairwoman Ellmers. We will go ahead and get started. Thank 
you, Mr. Richmond, our ranking member. And we have today with 
us Congresswoman Herrera Beutler from Washington, who is on our 
Subcommittee.
    This is the Subcommittee on Health and Technology of the 
House Committee on Small Business. And the title of our 
Subcommittee hearing is Not What the Doctor Ordered: Barriers 
to Health IT for Small Medical Practices.
    Good morning to everyone. I call the hearing to order.
    This is a very important issue for our health care 
providers and health care across our country.
    Health information technology is the computerized 
management of health information. It has the potential to 
improve health care delivery, decrease medical errors, increase 
clinical and administrative efficiency, and reduce paperwork. 
Studies have shown that adoption of health IT is becoming more 
common, but the transition is a slow one. In 2010, the Centers 
of Disease Control and Prevention found that only 25 percent of 
office-based physicians had fully functional electronic health 
records or EHR. And 10 percent had a basic EHR system. Studies 
have shown that there is a digital divide on health IT between 
large and small medical practices. A study of eastern North 
Carolina confirmed the existence of the digital divide and 
found that the smaller medical practices is, the less likely to 
be using the EHR.
    As a registered nurse and the wife of a surgeon who has 
health IT, I understand that a modern efficiency and well-
equipped office is critical to the practice of medicine. Health 
IT offers promise to all medical professionals; however, 
financial, legal, and technology barriers prevent many, 
particularly small practices, from moving forward on EHRs. This 
issue is critical because almost 60 percent of office-based 
physicians work in practice with fewer than 10 doctors. In 
fact, the small practice is said to be the best indicator of 
the success of EHRs because it is likely to be the last to 
widely adopt the technology.
    Since 2009, many physicians have received Medicare 
incentive payments for e-prescribing part D medications. 
Beginning this year, doctors are eligible for Medicare and 
Medicaid incentives under a separate program if they 
demonstrate meaningful use of electronic health records. I am 
particularly concerned that physicians may not be aware that 
they must report e-prescribing activity this year to avoid e-
prescribing penalties that will begin next year. There are 
other challenges, too. As more personal information is 
available electronically, patients must feel confident that 
their medical information is secure and their privacy is 
protected. And physicians need to be assured that the 
information that they transfer is not changed or misused.
    We look forward to hearing from today's witnesses about how 
these barriers can be addressed. I now yield to our Ranking 
Member Richmond for his opening statement. [The information 
follows:]
    Mr. Richmond. Thank you, Madam Chairwoman. And I want to 
thank our panelists and our guests that are here today to 
discuss this very important issue, specially as we try across 
this country very diligently to improve our health outcomes and 
to make sure that we provide the best medical care that we can 
do--that we can possibly do. And that means effectively using 
our information technology to do that.
    So today's hearing will offer an opportunity to examine 
ways that we can improve the implementation of health 
information technology. Health IT has the potential to advance 
health care quality while reducing costs, but right now many 
small health care providers simply cannot afford it. We have 
seen the benefits recent technology can bring to our daily 
lives in a variety of ways. It is now time for our health care 
system to catch up with the benefits of health IT that are 
numerous and wide-reaching for all sizes of medical practices.
    Those fortunate enough to have access to this technology 
already know how it decreases health care costs, improves 
patient safety, and reduces the practice of defensive medicine. 
These system-wide benefits ultimately to an increased access to 
affordable health care.
    Since Hurricanes Katrina and Rita, when physicians struggle 
to provide adequate care because they lacked access to 
patients' health IT, it has been a key concern for my state, 
which is Louisiana, and our health care industry. I am proud to 
say Louisiana has been focused on creating a health information 
exchange since 2007 and was among the first states to offer 
incentive patients to Medicaid providers this year. We have 
made upgrading our health IT infrastructure a priority and I am 
honored to have Dr. Elliott, a solo practitioner from my 
district here today to share her experiences.
    From a business perspective, fully functional electronic 
health records have the potential to improve a practice's net 
profit by over $80,000 during a five-year period. In addition, 
effective health IT can increase the doctor's time with the 
patients and improve administrative efficiency by reducing 
paperwork. Such benefits make a clear case as to why health IT 
is needed to assist small practitioners who strive to provide 
the best care to their patients. However, right now there are 
inadequate incentives for health care providers to adopt many 
of these technologies. With 80 percent of the nation's patient 
care delivered by small practices, it is important to 
understand why most of them do not use health IT. Small 
practices face a number of unique challenges, including 
financial barriers and complex regulations. Besides upfront 
costs exceeding $40,000 to implement the technology, small 
practices face additional design costs, practice disruption, 
and a lack of certified products. As a result, a significant 
gap exists in health IT adoption between large and small 
practices.
    I will just--I will insert the whole statement for the 
record but I just want to say and comment our Chairwoman 
Ellmers and add to the audience that I think that this is where 
Congress works best, when we acknowledge that we know what we 
know and we know what we do not know. And those things that we 
do not know we look to the people who do it on a daily basis 
and the people who have the on-the-ground expertise. So we look 
forward to hearing the testimony today because it will be your 
testimony, your suggestions, and your input that guides the way 
that we work towards solving this issue in a bipartisan way 
because the issue is too important not to get it done. It saves 
lives, reduces costs, and all of those things that I know we 
are all committed to doing on both sides of the aisle across 
every walk of life.
    So thank you to the Chairwoman and thank you to the 
panelists. [The information follows:]
    Chairwoman Ellmers. Thank you, Mr. Richmond for your 
comments. And I cannot agree more on what you stated.
    I now would like to ask Ms. Herrera Beutler for her opening 
comments.
    Ms. Herrera Beutler. I will keep it brief. I want to share 
a story. I had a young nurse, a young woman in my district in 
Clark County come and visit with me a month or two ago. And she 
was there to talk about electronic medical records, personal 
health records, or e-records for hospitals or small practices 
or solo practices. And her story was compelling.
    Her father, who was a constituent of mine, would bike every 
day up and down a certain--perfect physical health. He was 
between 55 and 60, I believe. Tremendous. And he had had--I do 
not know if it was a palpitation. He had a problem. They took 
him to the ER. And she was a nurse. She went with her mom and 
she said we think there is something here. She said I think 
there is a specific issue here. And they ran the tests and they 
waited and the tests came back negative. They said you are 
fine. So they sent him home. And I think within--I think it was 
two weeks. It was a shorter period of time. He had it happen 
again and he died. And, you know, she was devastated. The 
family was devastated. And she said about--a short period of 
time after that she received a call from the hospital that said 
we are so sorry. We lost the paper record. And it actually was 
not negative. And went on to explain it was a problem with the 
paper. It was a problem with losing the paper.
    And it is so hard to sit there and have someone--you hear 
about it. You hear this is partially why we need to upgrade and 
we need to get there. And here is someone who works in the 
medical profession and she was looking at me saying do 
everything you can to speed the implementation of electronic 
medical records for many reasons.
    We talked about Katrina. I have Lewis County in my 
district. We have--Kent has severe flooding, which wipes out 
homes. Floods eight feet plus of the bottom and up to second 
story homes. And when that happens, these are older 
communities, their medical records could be--I do not know. 
Their immunizations could be stuffed somewhere in a file. And 
what happens? We lose patient records. And it is imperative.
    I served here on the Hill as a health policy aid before 
elected office, before going home and then coming back here. 
And this was a bubbling issue, you know, in the last decade. 
This has been something Washington State has worked towards, a 
state partnership along with the federal efforts in a very 
bipartisan way because we recognize we have to get there.
    The challenges are costs and implementation. I have a 
doctor from southwest Washington who is going to share a little 
bit about her experience, but the reality is we are trying to 
find out what we do not know, to Mr. Richmond's point, and 
figure out how we can speed this along. Because paper is--as 
someone who represents a timber industry, I like using paper in 
a lot of areas. Let me put that on the board. But when it comes 
to this issue we need to make sure that we are entering the 
21st century.
    So with that I yield back. I look forward to our testimony.
    Chairwoman Ellmers. Thank you. And I will just start off by 
a little housekeeping. As far as the light system, you will 
have five minutes to deliver your testimony. I will be lenient 
if you go over because I value so much your input. And the 
light will start out as green. When you have one minute 
remaining the light will turn yellow. Finally, it will turn 
red. And then that basically ends your five-minute period of 
time. And I ask you to try to stay to that, but again, we will 
be lenient today for the purposes of this Subcommittee.

STATEMENTS OF FARZAD MOSTASHARI, M.D., NATIONAL COORDINATOR FOR 
 HEALTH INFORMATION TECHNOLOGY, U.S. DEPARTMENT OF HEALTH AND 
  HUMAN SERVICES; KAREN TRUDEL, ACTING DIRECTOR, OFFICE OF E-
    HEALTH STANDARDS AND SERVICES, CENTERS FOR MEDICARE AND 
 MEDICAID SERVICES; SASHA KRAMER, M.D.; DENISE ELLIOTT, M.D.; 
  ANDREW SLAVITT, CEO, OPTUMINSIGHT; DAVID L. BAUMER, PH.D., 
     PROFESSOR OF LAW AND TECHNOLOGY, NORTH CAROLINA STATE 
                           UNIVERSITY

    Chairwoman Ellmers. With that, I would like to introduce 
our first panelist, Dr. Farzad Mostashari. He is the national 
coordinator of health information technology with the U.S. 
Department of Health and Human Services. Dr. Mostashari became 
the national coordinator in July 2009. Previously, he served in 
the New York Department of Health and as Assistant Commissioner 
for the Primary Care Information Project, where he facilitated 
the adoption of health information technology by providers in 
underserved communities. Dr. Mostashari did his graduate 
training at the Harvard School of Public Health and Yale 
Medical School, and his internal medicine residency at 
Massachusetts General Hospital.
    Thank you so much for being here today, and again, you have 
five minutes.

                 STATEMENT OF FARZAD MOSTASHARI

    Mr. Mostashari. Good morning, Chairwoman Ellmers, Ranking 
Member Richmond, distinguished members of the Subcommittee. I 
am Dr. Farzad Mostashari, the national coordinator for health 
information technology at the Department of Health and Human 
Services. Thank you for giving me the opportunity to appear 
before you today to talk about what the Office of the National 
Coordinator is doing to support the deployment and meaningful 
use of electronic health records, especially among smaller 
physician practices.
    I know from personal experience, both the importance and 
the challenges of using better information to improve 
individual and population health, especially in a small 
practice setting. As the former head of the Primary Care 
Information Project in New York City, we reached out to 
practices that served Medicaid patients and signed agreements 
with providers in small practices and community health centers 
and hospital outpatient departments to establish electronic 
health records systems.
    Over half of small practices in the city's three most 
underserved communities eventually signed up with the program. 
In a little over a year, more than 1,000 providers started 
live-use of EHR systems with a 99 percent implementation 
success rate. It was hard.
    The Office of the National Coordinator's Core mission is to 
improve patient care, improve health outcomes, and make the 
health care system more efficient through the effective use of 
health IT. Much of ONC's work is aligned in support of a 
Medicare and Medicaid meaningful use EHR incentive programs. 
These programs, which my colleague from CMS will talk about in 
more detail, provide financial incentives to eligible providers 
and hospitals that adopt and use electronic health records in a 
meaningful way to improve health and health care outcomes. This 
unprecedented public investment does not treat technology as an 
end to itself. Rather, it will result in concrete progress 
towards our policy objectives--measurable improvements in 
health and reduction in costs.
    I would be happy to talk about all the ways that ONC is 
supporting this transformation in health care, but in the 
interest of time today I will highlight some of our major 
initiatives.
    ONC is at the center of efforts to establish standards for 
EHR systems and let providers and the public know which EHR 
systems are meeting these standards. We currently have six 
authorized private sector certification bodies which have 
certified more than 700 separate EHR products. This is 
indicative of the development of innovative EHR products that 
are less expensive and easier to implement for small practices 
than ever before. Of note, 60 percent of the vendors of these 
systems are small businesses with fewer than 50 employees.
    Our Regional Extension Center program, inspired by the 
Agricultural Extension Center program, supports a network of 62 
state and local organizations that offer training, information, 
project management, and technical assistance to providers in 
order to ease and accelerate the adoption and meaningful use of 
EHR technology. Particularly by primary care providers, small 
practices, critical access hospitals and other underserved or 
underresourced providers. The Regional Extension Center program 
has enrolled more than 70,000 providers, 94 percent of whom are 
primary care providers and about half are in individual or 
consortia of small practices.
    ONC's Health Information Exchange program is helping build 
the infrastructure for sending and receiving electronic health 
information securely across the nation's health care system 
with a focus of simple but secure technologies that can be used 
by all providers to improve coordination of care, whether they 
care for patients in small practices, urban clinics, or rural 
hospitals.
    These efforts have sparked a remarkable growth in the 
health IT industry as a whole, which has led to a strong demand 
for skilled works. To address this emerging shortage, ONC has 
supported 82 community colleges in establishing health IT 
certificate programs where training can be completed in six 
months or less. So far, over 2,400 students have graduated from 
the community college programs. Another 4,700 are currently 
enrolled, and we are on our way towards our target of 
graduating 10,000 students every year. Many of these graduates 
will end up helping small practices who often lack the 
resources for dedicated IT staff to successfully implement EHR 
systems.
    Finally, I want to point out that ONC, along with our 
partners at CMS, the Office of Civil Rights, and other federal 
agencies have taken a number of important steps towards making 
sure electronic health records remain private and secure. ONC 
has embedded privacy and security into all of our programs and 
policies. For example, the standards and certification criteria 
I spoke about require that EHRs have the capability of 
encrypting electronic health information, tracking who accesses 
each record, and limiting user access. Meaningful use requires 
that providers conduct a security risk assessment and mitigate 
any risks identified. Our Regional Extension Centers are 
providing technical assistance on protecting privacy and 
security and our new health IT training programs ensure that 
the future generation of technical workers are well grounded in 
privacy and security.
    Health information technology is indeed a critical 
foundation that supports efforts to modernize and transform our 
health care system. Now is the time to get down to the hard 
work of implementing and using health IT in a way that leads to 
better health care that is high quality, safe, coordinated, 
efficient, effective, and patient-centered. And I am proud of 
ONC's role in achieving that goal.
    Thank you for giving me the opportunity to appear before 
you today. I look forward to answering any questions you might 
have.
    [The statement of Mr. Mostashari follows:]
    Chairwoman Ellmers. Thank you, Dr. Mostashari.
    I would now like to introduce our second panelist today, 
Karen Trudel. Ms. Trudel is acting director of the Office of E-
Health Standards and Services for the Centers of Medicare and 
Medicaid Services in Baltimore, Maryland. The Office of E-
Health Standards and Services coordinates implementation of the 
comprehensive e-health strategy for CMS. Ms. Trudel also has 
responsibility for enforcement of Health Insurance Portability 
and Accountability Act standards and oversees the areas of 
personal health records and electronic prescribing.
    Welcome to you. And you have five minutes for your 
testimony.

                   STATEMENT OF KAREN TRUDEL

    Ms. Trudel. Thank you, Chairwoman Ellmers, Ranking Member 
Richmond, and members of the Subcommittee. Thank you for the 
invitation to discuss CMS's implementation of the Electronic 
Health Record (EHR) Incentives program created by the Recovery 
Act and specifically the impact of this implementation on small 
and solo providers.
    The widespread adoption of certified EHR technology used in 
a meaningful way is one piece of a broader health information 
technology infrastructure needed to modernize our nation's 
health care system. As we have worked to implement the EHR 
incentive program, we have sought to strike a balance between 
setting program requirements high enough to move providers 
expeditiously towards this goal but not so high that providers 
choose not to participate in this voluntary initiative.
    The Medicare and Medicaid incentive programs provide 
incentive payments for eligible professionals and hospitals 
that demonstrate meaningful use of EHR technology. The Medicaid 
incentive program also provides incentive payments to providers 
in their first year of participation if they adopt, implement, 
and upgrade EHR technology. Eligible professionals can receive 
up to $44,000 over five years from the Medicare program, or up 
to $63,750 or six years through the Medicaid program. The 
hospital incentive payments for Medicare and Medicaid are 
calculated with a formula that begins with a base amount of $2 
million with an added amount based on the number of discharges.
    Providers must register to participate in the programs and 
attest that they have either adopted, implemented or upgraded 
certified EHR technology or that they have meaningfully used 
that technology during a 90-day reporting period. We recognize 
that for some providers, particularly small and solo practices, 
moving to adoption and meaningful use of EHRs is a huge shift 
from current practice. For that reason, CMS has taken an 
escalator approach to meaningful use envisioning three separate 
stages that demand increasingly vigorous requirements.
    We are currently in the first stage, which focuses on using 
EHRs to collect clinical data, electronic prescribing, initial 
steps toward patient engagement, and, as Dr. Mostashari 
mentioned, ensuring privacy and security of patient 
information. We originally proposed 25 meaningful use criteria 
for eligible professionals and 24 for hospitals. The provider 
community commented that meeting all those criteria would be 
difficult and they requested flexibility. We responded by 
separating the criteria into a core set that all providers must 
meet. And those are 15 for eligible professionals and 14 for 
hospitals. And a menu set with providers being able to select 
five of the remaining 10 criteria to implement.
    Less than a year after publishing the final rule, CMS is 
already providing incentive payments to providers. Since 
January 1, 2011, more than 42,600 eligible professionals and 
hospitals have registered for either the Medicare or the 
Medicaid EHR incentive program via a web-based application. The 
same application is used for Medicare providers to attest to 
their meaningful use of the EHRs. States are developing their 
own out-of-station mechanisms and data is exchanged bi-
directionally with CMS and the States. Providers were first 
able to begin to attest to meaningful use beginning April 18th 
of this year, and 485 providers did so successfully in the 
first month of the program. The first Medicare payments 
totaling $75.9 million went out to meaningful users on May 
19th.
    CMS is encouraged that States across the country have 
already shown strong enthusiasm for the EHR incentive program. 
States began launching their programs in January. Fifteen 
states have launched to date and two more are set to come 
online next week. Further, the majority of states have 
indicated to us they will launch by the end of calendar year 
2011. And as of May 4th, over $83 million in Medicaid incentive 
payments have been made.
    CMS strives to increase awareness and participation in the 
incentive programs by offering a variety of information and 
tools that providers can use to learn about and successfully 
participate in the programs. We use a variety of mechanisms to 
engage providers, including social media, national provider 
calls, and webinars. We have developed a special website 
containing guides that explain the meaningful use requirements, 
user guides for the web-based system, and many other products. 
Our strategy focuses on making free, high quality information 
available through mechanisms that are accessible to busy 
providers.
    The administration has made the adoption of meaningful use 
of EHR technology a high priority. Our stage one rule lays the 
groundwork for establishing a robust national health 
infrastructure that supports the adoption of EHRs and PHRs and 
will help providers practice safer and more productive 
medicine. We look forward to working with Congress, our many 
stakeholder partners, and our colleagues at ONC to ensure that 
the implementation of the EHR incentive program fosters an 
expanded use of health information technology, broadens the 
information exchange infrastructure, and promotes the adoption 
of electronic health records as intended by Congress.
    I am happy to answer any questions you might have. Thank 
you.
    [The statement of Ms. Trudel follows:]
    Chairwoman Ellmers. Thank you so much. I am going to ask a 
few questions and then I will yield to Mr. Richmond, our 
ranking member. And we will go from there.
    My first question is for you, Ms. Trudel. The meaningful 
use, you touched on it in your opening statement. Can you once 
again reiterate what it is and how it is that physicians and 
hospitals are adhering to it? Because that is obviously the 
proof that they have to provide.
    Ms. Trudel. Right. Exactly. I will walk through some of the 
core requirements for meaningful use, and I think that will 
give you a good idea of where we are trying to go with that. A 
number of the core requirements focus around capturing data in 
the electronic health record so that it can be used over and 
over for clinical reasons. Some of those include capturing a 
list of current and active problems, medication lists, vital 
signs, allergies, smoking status, demographics. So those are 
the things that we are capturing in the EHR. Then there are 
some things that are action-oriented, like computerized 
provider order entry and electronic prescribing. And of course, 
the privacy and security requirements.
    Chairwoman Ellmers. What would happen if a physician did 
not actually--what would happen if they were not able to 
provide that information to you?
    Ms. Trudel. For this first year, and again this is a 
voluntary program, the provider can register for the program 
and then has the entire year through to February of 2012, to 
report that they have meaningfully used for a 90-day period of 
their choosing. So they can decide what that period is. They 
track these requirements, make sure that they have met them, 
and at that point they would sign on and say I am a meaningful 
user. If they do not do that in the first year, they can choose 
to wait until the next year to start out and it does not have 
any effect on the total payment that they could receive.
    Chairwoman Ellmers. So there are no penalties assessed for 
the first year?
    Ms. Trudel. Absolutely. The penalties do not take effect 
until 2015.
    Chairwoman Ellmers. 2015. And that would not reflect 
retroactively at all?
    Ms. Trudel. No.
    Chairwoman Ellmers. Okay. I do want to clarify one thing 
and I hope you can do this for me. You mentioned the incentives 
in Medicare and Medicaid but you cannot get incentives for 
both. You basically have to--correct me if I am wrong, but the 
physician would have to choose which one he would--he or she 
would like.
    Ms. Trudel. Right. The eligible professionals must select 
one or the other. Hospitals, on the other hand, including 
critical access hospitals, can participate in both programs.
    Chairwoman Ellmers. Okay. So hospitals can participate in 
both but physicians cannot. Thank you.
    Dr. Mostashari, I have a question about funding that was 
provided with the American Recovery and Reinvestment Act for 
HIT. Our records show that $2 billion was provided for this. 
How has that been utilized? And has all of it been utilized? Or 
is there other monies out there? How are we going to apply 
that?
    Mr. Mostashari. Thank you. Yes. ARRA provided for $2 
billion for the national coordinator to help establish the 
infrastructure that would permit providers to achieve 
meaningful use of electronic health records as well as 
increasing the privacy and security of such systems. We have 
obligated $1.97 billion of the $2 billion. The largest single 
chunk goes towards the Regional Extension Center program. Some 
$720 million to establish those assistance--technical 
assistance and project management facilities for small 
practices and critical access hospitals and so forth. There is 
approximately $560 or so million that went to state and state-
designated entities for information exchange purposes. We have 
$265 million that went to beacon communities. These are 17 
communities, kind of our crown jewels. And I promise the fact 
that on this panel--have beacon communities in your states is 
completely accidental. And these are really the crown jewels 
that are showing how information technology can work.
    Chairwoman Ellmers. Oh, so when you say beacon, is that, 
your field test?
    Mr. Mostashari. These are communities that were ahead of 
the curve, whether it is in Piedmont, North Carolina; whether 
it is Crescent City; the inland Northwest beacon community or 
Grand Junction, Colorado which are putting it all together. 
They have higher rates of electronic health record adoption 
than other parts of the country. They also have governance 
mechanisms and leadership to use those--the technologies, the 
redesign of physician practices, the performance monitoring and 
feedback, and really bringing all the tools to bear to show how 
health information technology and its meaningful use can show 
demonstrable and near-term impact on cost and quality of health 
care.
    Chairwoman Ellmers. Thank you so much. I yield now to Mr. 
Richmond, our ranking member.
    Mr. Richmond. Thank you. I will direct this question 
actually to both witnesses. And I can only think back to my 
life, and especially my childhood when we talk about motivating 
me to do one or two things. It was either the carrot or the 
stick. And in thinking of that I guess my question would be for 
many physicians. Medicare and Medicaid reimbursements are 
already low. The penalties that could further diminish these 
payment rates for practices that do not transition to 
electronic health records. And what I am afraid of is, 
especially in Louisiana, where we see more physicians denying 
to see Medicaid and Medicare patients. And as HHS and CMS 
examine how these penalties may ultimately affect access to 
health care.
    Ms. Trudel. I would start by pointing out that there are no 
penalties in the Medicaid program at all. The payment 
adjustments are related to the Medicare program solely. 
However, you make a good point and I think that the balance in 
the legislation was that there was a carrot and stick approach 
but I would venture to say that when you add the incentive 
programs together with what ONC has done to help to assist 
providers, especially small and solo providers, to move toward 
electronic health records, the carrot is a lot larger than the 
stick.
    Mr. Mostashari. And I would add that our goal is to have as 
few providers, eligible professionals and hospitals that would 
incur the payment adjustments as possible. We want to help 
everybody succeed in this program. We really want and are doing 
everything we can to make it so that we not only have an 
ambitious program but one that is achievable and that we 
provide the supports and whatever else is needed to help every 
provider succeed on this track. And I think you do need both 
the incentives and the penalties to get to this transformation, 
but you also need the supports around it to help people 
succeed.
    Chairwoman Ellmers. Mr. Richmond, will you yield? I have a 
question about the penalties versus the incentives. Is there a 
time limit on the incentives? I know the penalties start in 
2015 but do the incentives continue on or does that stop at 
2015?
    Ms. Trudel. For Medicare purposes, the incentives extend 
for a five-year period. And they start with a maximum of 
$18,000 per year per provider and are scaled down to $2,000 per 
year per provider. For Medicaid, the incentive period goes on 
for six years and it is frontloaded with a first year incentive 
of $21,250.
    Chairwoman Ellmers. And the penalties? Starting in 2015, 
does that extend on?
    Ms. Trudel. Right. No penalties for the Medicaid side, as I 
said. And for Medicare, they phase in, again, with a one 
percent penalty in 2015, moving to a two percent in 2016, and 
then between three and five extending indefinitely after that.
    Chairwoman Ellmers. So there are penalties indefinitely?
    Ms. Trudel. Exactly.
    Chairwoman Ellmers. Okay, thank you. And I thank Mr. 
Richmond.
    Mr. Richmond. And this question would be for Dr. 
Mostashari. The question is based on the idea, and I want to 
commend you all for a very open and competitive certification 
process and market.
    The concern is whether the deal in accreditation has 
burdened small providers. And if it is true, especially for 
those in need of practice compatible EHRs, did you all consider 
the potential impact of the delays when developing the 
certification program?
    Mr. Mostashari. It was quite a concern. A little bit of 
background on this. Prior to the passage of HITECH there was 
only a single accreditation body. There was the Certification 
Commission for Health Information Technology. And the 
legislation--the HITECH legislation asked us to take another 
look at that. And the reason was because there were some who 
were concerned about having only a single point and not having 
options or choice and a competitive marketplace around that 
process.
    So we were required to take a look at that, and our federal 
advisory committees recommended to us that we, in fact, change 
that. And we opened it up and have more competition in the 
accreditation process. There was a risk, however, that you 
point out in this switchover that there would be a time where 
we would not have sufficient products certified or the pipeline 
for getting a product certified could hinder the ability of 
providers to meet meaningful use. And so we created a temporary 
program that could go into place quickly and a permanent 
program. The temporary program, indeed, went into effect very 
quickly and I think we have not heard much in the way of 
concerns about the certification program. And that is a good 
thing because it is working. We have now six accredited testing 
and certification bodies instead of where we had one. The cost 
of certification has come down. The speed of certification has 
gone up. We hear from vendors that the quality of service they 
are receiving has increased, and we now have more certified 
products than ever before. So in this case, it was a concern 
but I think with the right policies and with the right 
implementation we have managed to address that well.
    Mr. Richmond. Good. And then my last question directed at 
both of you or both of you feel free to answer or not answer. 
But the last question is just in today's age with so many 
concerns with security and privacy--I also sit on Homeland 
Security so I am very aware of the fact that everyday there are 
thousands of people that wake up trying to hack into either the 
.gov world or the .com world. And we have to be concerned about 
that.
    And what I am asking about now are complaints that 
especially for small practitioners that there is little 
guidance on how to safeguard to ensure HIPAA compliance. And 
what can we do, what can you all do to help those small 
practitioners overcome that fear? And after that I will yield 
back, Chairman.
    Mr. Mostashari. Absolutely. And maybe after my colleague 
from CMS can speak about that.
    Safeguarding privacy and security is a shared 
responsibility. And the practices, not just in terms of their 
professional responsibilities, not only in terms of patient 
expectations, but also under the law have a responsibility to 
safeguard the patient information that has been entrusted to 
them. And the Office of Civil Rights has the ability to 
investigate any complaints and can levy substantial fines as 
they have done against some hospitals and health plans 
recently.
    But we need to, as you say, support providers, particularly 
the smaller practices in being able to do this. We are working 
with the extension center program to provide that technical 
assistance, to provide that checklist, that easy to understand, 
easy to use checklist. Some templates and best practices are on 
how to do the appropriate way, whether it is physical security, 
administrative security, clinical security settings, 
configurations and so forth in the small practice setting. And 
that information is available not only to providers who work 
with the extension centers, but to any provider.
    We are also working to make it easier on the technology 
side through our research and development programs. We have a 
consortium of academic medical centers who are at researchers' 
institutions who are working to develop the next generation of 
technologies to make it the easy thing to do, the secure thing 
to do. And to make it almost a default and to bake into the 
products the ability to encrypt automatically, for example, and 
to safeguard patient privacy.
    But as you point out, it is a--we can just remain ever 
vigilant. This is a daily war where the folks of the other side 
are constantly looking for new opportunities, new 
vulnerabilities, and new technologies. And we have to, on our 
side, be ever vigilant as well.
    Chairwoman Ellmers. Well, thank you, Mr. Richmond. And I 
now yield to Ms. Herrera Beutler, for her questions.
    Ms. Herrera Beutler. I will make it brief. Thank you, Madam 
Chair.
    A couple of things you mentioned, Ms. Trudel, that kind of 
sparked my interest, with regard to penalties, did I understand 
you right when you were saying that for hospitals versus, you 
know, group practices there were different--I know they went 
into effect on different implementation dates and I know 
Medicaid is withheld from the penalty side. Did I hear you say 
that hospitals are exempt? At the very beginning, what did----
    Ms. Trudel. No, hospitals and eligible professionals are 
both subject to the same penalty at the same time.
    Ms. Herrera Beutler. Okay. Okay. And in terms of small 
group or solo practitioners, I mean, a hospital system is going 
to have a lot more wherewithal to implement any HER, period--a 
small group practitioner or a solo provider in a rural area, 
who is not a critical access hospital. Right? I know we have 
brought that up--is going to have a hard time making this 
investment, particularly if they are the only family physician 
or OB in a region. And I have met some of those doctors. Are 
you taking extra precaution and care and assistance? Because I 
heard you talk about a lot of--the goal is to assist--with some 
of those in recognizing--especially if we are talking about a 
family doc--it is an aging population. Right? Not very many 
people are going back into this practice and that is a whole 
other issue. But some of them I have met have said do you know 
what? I can run my practice. I have figured this out. I have 
enough problems with med-mal and everything else. Do not bring 
this my way. How are you overcoming that in a non, you know, 
penalty way?
    Ms. Trudel. First, I would like to talk a little bit about 
the outreach that we have been doing which is very much geared 
toward reaching exactly those kinds of providers.
    As an example, our 10 regional offices over the past nine 
months have conducted over 400 events, more than half of which 
were targeted specifically to, or included, significant 
quantities of small and rural physicians to try to explain to 
them what the program is, what the advantages are of it, how to 
take advantage of it, and what some of the other tools and 
resources, including the Regional Extension Centers, are 
available to them so at least they have the ability to fully 
and completely assess the opportunity and make a decision as to 
whether or not they want to take advantage of it.
    Ms. Herrera Beutler. What kind of feedback, and this is a 
question I will ask of the next panel as well because they are 
the docs doing this, what kind of feedback have you had from 
them? What kind of uptake--positive or negative?
    Ms. Trudel. We are actually getting good uptake. We have 
been doing some trending over the period of the last year and 
we are getting a sense that many, a large percentage, I would 
say over 70 percent of the physician practices that we are 
talking to, actually have exhibited some interest and are 
thinking about it.
    Ms. Herrera Beutler. So when they have problems, right, 
with a company that was certified by one of the six, you know, 
certification agencies, what is their recourse?
    Mr. Mostashari. Let me talk about the supports that we are 
offering. Dr. Brull was one of the first providers to get their 
payments for meaningful use last week, and she spoke about 
working with the Regional Extension Center in Kansas where she 
is a family practitioner in a small practice. And she talked 
about how when she first saw the--started adopting the systems 
and saw the list of requirements, that she was daunted by that. 
But that the Extension Center helped give her an understanding 
of what is really behind the meaningful use, practical steps on 
how to achieve it, help with project management. And she gave 
one example about saying there were quality measures around 
colonoscopies. And she thought she was doing a pretty good job 
with colonoscopies that can be lifesaving if they identify 
cancers early on and they can be removed. And she said when she 
actually had the information to look within her data she was 
only doing it about 40 percent of the time. And she was really 
upset. But then the technology helped her make a list of all 
the patients, reach out to them, have reminders in the system. 
Those are all part of meaningful use. And she reported that she 
was not satisfied yet but things were better; she was at 84 
percent now. And she said I would never go back to being on 
paper.
    So I think what we have in our favor is that providers, 
even though the road is hard, providers like Chairwoman Ellmers 
husband, who has gone through the hard work, would never go 
back to using paper-based systems. And it is rewarding because 
it is in line with what they want to do as physicians and 
nurses.
    Ms. Herrera Beutler. And really quickly, if they have not 
just a bump in filling out the paperwork or jumping through the 
hoop or meeting the quality measure, if they have a real 
substantive problem----
    Mr. Mostashari. Yes.
    Ms. Herrera Beutler [continuing]. Or IT provider, I mean, 
do they have recourse?
    Mr. Mostashari. Yes. The Regional Extension Centers--let me 
give the example. Georgia and Massachusetts Regional Extension 
Centers are working with banks to help their providers get 
loans for the hardware and software. Very practical, addressing 
a real need that they have. The Extension Center in L.A. are 
doing project management, helping them do every phrase of 
project management of going from implementation to meaningful 
use and are working directly with the vendors to identify 
problems and mitigate them when they have it. Ohio REC has 
developed a comprehensive needs assessment that goes through 
and helps the practices identify what are some of the weak 
points and gaps and barriers and working with the provideri to 
address any issues before they go live, rather than trying to 
fix things afterwards.
    So those are all examples of practical ways that the 
extension centers all across America are working with the 
70,000 providers to help them address any problems they might 
have and move forward productively.
    Chairwoman Ellmers. Thank you. And I now yield to Mr. 
Altmire for his questions.
    Mr. Altmire. Dr. Mostashari, I represent an area in western 
Pennsylvania that has some rural areas, it has some very highly 
developed health care systems, as well as smaller providers 
like you are talking about today. But what I hear all the time 
is that the certification process is still very cumbersome, the 
additional certifying entities that were there. And for folks 
who have failed certification, if a provider fails 
certification, does HHS encourage the certifying bodies to 
share why the certification failed, to recommend improvements 
that could be made the next time?
    Mr. Mostashari. the certification process, the way it works 
is that a vendor of a system, a company that manufacturers the 
software, would go to the accredited testing and certifying 
body and they would seek certification of their product. So 
that process we have heard relatively few complaints about. 
There is, as I mentioned, more competition in that area that 
has reduced the costs. It has increased the timeliness and the 
level of service that the vendors are achieving. And as a 
result, we now have more products certified by a whole range of 
vendors than ever before. So providers have--now, the health 
care providers who purchased these systems, they do not 
themselves need to go to get certified for the product. They 
can purchase the system that has already been certified.
    There are, particularly for the larger health systems who 
have self-developed their own systems, we have created an 
opportunity for them in the regulation to get self-certified, 
to say I do not want to buy a product that is commercial, off-
the-shelf; I want to be self-certified. And for that purpose we 
do have a program that would allow them to be self-certified. 
We have not heard much in the way of--I mean, the standards 
that they have to meet are the same as the standards that a 
vendor would have to meet and it is a rigorous process. They 
have to show that the products have the same security as a 
commercially-developed product, the same level of 
interoperability as a commercially-developed product, and that 
can be a challenge. But many of the organizations who have 
developed their own products are very capable and we have not 
heard too much in the way of concerns about that.
    Mr. Altmire. And that is where I was going to go actually. 
How do you distinguish--how does HHS distinguish between a 
large, very advanced on the health IT side, provider that has 
already spent in some cases hundreds of millions of dollars to 
upgrade their IT to become compliant, to go through the 
certification process, and then contrast that with the money 
that is available, the incentives, the meaningful use 
regulations, to a much smaller provider, maybe out in a rural 
area that does not have anywhere near the resources, but we all 
want to go in the same direction. You do not want to end up 
with a VA DOD circumstance where they are incompatible, they 
cannot communicate with each other, you want to all make sure, 
especially in a region but eventually for the country, we have 
an interoperable IT system. So how do you navigate those two 
very different situations?
    Mr. Mostashari. That is exactly right. And I think that is 
why the certification is so important because it says that no 
matter what system you are using, whether it is self-developed, 
whether it is the biggest vendor in the country or the small 
vendor in the country, they all have to meet certain 
requirements around interoperability. But they all have to have 
the codes that map to a same set of codes that if I get a piece 
of information from one vendor to another vendor, it can be 
understood across the systems, that they can produce the same 
sort of messages when they are reporting to public health, for 
example. On the quality measures, producing those. So the 
certification process really is our most important tool in 
ensuring the interoperability between vendor systems, large or 
small.
    Mr. Altmire. so you do have an end in mind. You are not 
just allowing everyone in sort of a free-for-all manner to come 
up with their own systems and get certified, but you are saying 
we are not going to tell you how to do it. We are not going to 
tell you what direction to go and what is best for you, but in 
the end we want to have a system where everyday can communicate 
with each other.
    Mr. Mostashari. That is exactly right. We have to balance 
between allowing innovation to flourish, not overspecifying to 
say that, you know, the box has to be this big and this wide 
and this is how it has to look. Allowing innovation to flourish 
but saying there are some bottom-line outcomes that we are 
going to hold you to. Can you produce a message, an electronic 
message for interoperability that is specified exactly thus? 
Can you meet these functional requirements and ensure that we 
do have, not just a collection of systems that are deployed but 
actually systems that can work together to create the bigger 
public benefit.
    Mr. Altmire. Thank you, Madam Chair.
    Chairwoman Ellmers. Thank you. I now yield to Mr. Tipton 
for his questions.
    Mr. Tipton. Thank you, Chairwoman Ellmers and Ranking 
Member Richmond, for convening this. Obviously, a very 
important issue for all of our areas. And Dr. Mostashari, I 
appreciate you bringing up Grand Junction on the western slope 
of Colorado, and we are seeing that extension actually in terms 
of the quality health care network going down through Montrose 
with the idea of extending it throughout the entire western 
slope of Colorado.
    I do have a couple of questions here in terms of just 
having an idea of really where we are at right now. What is the 
timeframe that it takes--weeks, months--to be able to get to 
the certification? For either of you. For doctor. Do you have 
any kind of averages?
    Mr. Mostashari. So for a provider to adopt an electronic 
health record system, it depends upon--very much on the product 
they select and the assistance they have around project 
management. So there are some vendors who very effectively can 
get a provider from start to finish in a matter of weeks. There 
are others, particularly for larger, much longer lead time 
planning, implementation, and so forth, design and custom 
configuration that is needed to take place. Every provider 
makes a decision for themselves in terms of what is in their 
best interest. And our hope with the extension centers is to 
give them the best advice we can or the extension centers can 
about what it right for that provider, that group, that 
hospital, in terms of the system that they implement.
    It is a challenging process. I want to make no bones about 
the transformation of workflows and processes and the 
difficulties that many practices, particularly smaller 
practices, will face as they make this difficult transition. 
But it is a rewarding process and ultimately will be not only 
leading to improved patient care and coordinated care but 
actually will help those practices succeed financially over the 
long run.
    Mr. Tipton. And if I missed this I apologize. But how many 
people--how many practices, if you have got an average, have 
signed up? And out of those, how many are solo practitioners?
    Ms. Trudel. I do not have any information about how many 
are solo practitioners. So far, since January we have had 
42,600 health care providers register for either the Medicare 
or the Medicaid program. Almost all of those were physicians. 
And, at this point, we have had our first payment run. Let me 
just kind of tack onto the back of the how long it takes 
question. Once a provider has gotten to the point where they 
believe they can meet the meaningful use requirements, they 
then have a 90-day reporting period during which they must meet 
all of those requirements. As soon as they have done that, they 
can go online to a web system and attest to that meaningful use 
and in a month or so they will have their incentive payment.
    Mr. Tipton. This may be a question maybe for the next 
panel. But if you would like to maybe contribute into one of 
the big complaints that I hear consistently from a lot of our 
physicians gets down to the coding issue which Dr. Mostashari, 
you were talking about just a moment ago. When we are talking 
about, like, Medicaid, is there kind of a streamlining process 
between requirements at the state and federal level? Because 
that has been a real cost-driver. I know, I believe in the 
state of Colorado we have a different from than the federal 
government has, you know, which is additional costs that the 
doctors actually have to be able to assume.
    Ms. Trudel. This has very much been foremost in our 
thoughts through the entire development and standing up of this 
program because there are both Medicare and Medicaid 
incentives. And in the case of hospitals, they can qualify for 
both. So, we have worked very closely with the states to make 
sure that the requirements for both, the meaningful use 
requirements, are essentially identical. The web-based system 
that we use for registration is the same for Medicare and 
Medicaid. The states will handle their own attestation and 
payments but we communicate with the state on an online basis 
so that we are comparing information and making sure that we 
have the right providers in the right programs.
    Mr. Tipton. And Madam Chairwoman, this may take just a 
second more if you would allow the answer on it, but one of the 
other concerns that we have from the patient side is certainly 
the privacy issues. Are you comfortable that, you know, we are 
making the strides and then are going to have, I think, Dr. 
Mostashari had taken to it being ever vigilant in terms of 
making sure that we are going to be able to have the patient 
privacy which I think has been an obstacle for some physicians 
as well?
    Mr. Mostashari. I think that we are making strides, 
important strides in that direction, everything from the laws 
and regulations that were passed through the HITECH Act that 
increased protections for patient privacy. They gave patients 
the right to see who has looked at their information and who 
their information has been divulged to, which I think is going 
to serve an important role in providing that assurance to 
patients. It provides for higher penalties, civil penalties for 
violations, consistent violations of HIPAA. It extends the 
range of HIPAA to business associates, that they must follow 
the same security requirements as the covered entities. There 
are, as we mentioned, protections that we put in place under 
the certification program, as well as through meaningful use 
that security be assessed and any gaps mitigated. We are 
working very hard to establish a governance mechanism for 
health information exchange entities. These are all pieces of 
this and I think we will see more and more of an impact on 
making sure that there is more of a sense of public 
understanding and public comfort, that their information is if 
anything, more secure in electronic format than in a paper-
based world where you do not know where your record is 
oftentimes. Records can be lost as Ms. Beutler recounted where 
you do not know who has looked at your record, where there is 
no way of limiting access to certain parts of the record. For 
example, the front office who maybe do not need to know all 
your diagnoses. So there are important protections, but we need 
to be ever vigilant and we need to do everything we can to 
ensure that we maintain the public trust.
    Mr. Tipton. Thank you, sir. And I yield back.
    Chairwoman Ellmers. Thank you. And I would like to thank 
our first panel for being here today and giving us your very 
important insight on the adoption of health IT for small 
medical practices. We will continue to watch all of this, and I 
want to work with you on helping to reduce the barriers that 
small medical practices encounter.
    And I would like to suggest, in regard to our second panel, 
if you both have staff here, if one of your staff members could 
remain and if you would identify those individuals to us. And 
again, thank you.
    We will now call the second panel to the table.
    Okay. I think we can go ahead and get started. And with 
that, I would like to say to our panel thank you very much for 
coming and sharing your comments and concerns with us on health 
IT. And I would like to yield to Ms. Herrera Beutler to 
introduce Dr. Sasha Kramer.
    Ms. Herrera Beutler. Thank you, Madam Chair.
    It is my pleasure to introduce Dr. Kramer. Dr. Kramer is a 
resident of southwest Washington. She serves Olympia, which is 
the northern part of my district on I-5, if anybody wants to 
know where that is. We are in between Seattle and Portland, but 
we are neither Seattle or Portland. Serves in Olympia and the 
surrounding areas in the field of dermatology. After completing 
a residency at Geisinger Medical Center in Danville, 
Pennsylvania, Dr. Kramer moved to Olympia in 2005 where she now 
lives with her husband and two sons. In May of 2009, she opened 
her own practice and has been an asset to our community ever 
since.
    Dr. Kramer, thank you very much for coming today and we 
look forward to your testimony as we move forward.

                STATEMENT OF SASHA KRAMER, M.D.

    Ms. Kramer. Good morning, Madam Chairwoman and 
distinguished members of the Committee, especially 
Congresswoman Herrera Beutler who represents my hometown of 
Olympia. As she said, Washington State.
    My name is Sasha Kramer. I am a board-certified 
dermatologist and I appreciate the opportunity to talk to you 
today about health information technology and the challenges 
that are facing physicians surrounding the selection, purchase, 
and implementation of electronic health records and their 
practices.
    So as Ms. Beutler mentioned, two years ago I opened my own 
practice in Olympia, where I currently employ two full-time and 
one part-time employee, and I see an average of 125 patients 
per week with 40 to 45 percent of my revenue coming from 
Medicare and Medicaid. Over two years ago I invested in an EHR 
system at a total cost of about $41,000. I did receive a 
$20,000 grant funded through the Washington Health Information 
Collaborative for Health Information Technology and paid for 
the remaining $21,000 out of my business cash reserves.
    As a solo practitioner, I was solely responsible for the 
research, selection, and implementation process of the EHR 
vendor and system. Initially, during system implementation my 
patient volume was dramatically reduced in order to accommodate 
the learning of the system by myself and the staff. It did take 
me about four weeks to return back to my normal patient 
schedule. However, two years later I am faced with the 
situation where I have to completely reinvest in a new system. 
Approximately one and a half years after I implemented my 
original system, my software vendor was acquired by another 
company that will not support my current network platform. Now 
I have no choice but to purchase a new system that will cost 
approximately $30,000 with $6,000 in annual charges. And aside 
from the financial investment, I once again have to take time 
away from my patients to implement and train my entire practice 
on this new system.
    Having said this, I fully support the use of health 
information technology. My practice and patients benefit from 
HIT in a number of ways, including improved patient safety, 
increased practice efficiency, and simplified claims 
processing. While I see these as benefits in my practice, there 
are significant barriers to full-scale adoption and 
implementation of HIT, including cost, regulatory barriers, and 
financial penalties and system integration.
    According to the American Medical Association, the average 
cost of an EHR system is estimated to be $30,000 per physician, 
with an average maintenance cost of between $3,000 and $15,000 
per year. This is a significant barrier for a specialty like 
dermatology where over 40 percent of the practitioners are in 
private practice or solo practitioners and half of those are in 
rural areas. Physicians seeking investment capital are having 
issues finding a lender willing to provide them with an 
unsecured loan. Others may attempt to finance their HIT system 
purchase with the vendor, but small practices like mine have 
little or no leverage in negotiating the terms and rates 
because of a limited market share.
    My practice is a great example of the unpredictable 
marketplace as I will have invested over $53,000, which would 
have been $73,000 if it were not for the grant, in two 
different systems over just a three-year time period.
    In addition, there are regulatory burdens with financial 
penalties that could hurt the full-scale adoption of HIT. 
Dermatologists and other providers are struggling with the CMS 
meaningful use timeline. For early adopters who have a contract 
with a service provider to meet 2011 and 2012 requirements 
under phase one, there will be a very short window between the 
release of phase two requirements and the deadline for meeting 
them in 2013. Furthermore, physicians are facing financial 
penalties on their annual Medicare billables of seven percent 
by 2017 if they are not in compliance with the meaningful use 
criteria, the physician quality reporting system, and e-
prescribing. This seven percent could be a practice's entire 
profit margin and could make the difference between a practice 
staying open and a practice closing. Simply understanding and 
implementing all of these different programs is extremely 
difficult and often overwhelming, especially to a small 
practice.
    In improving HIT adoption across dermatology, I urge the 
Committee to address three issues. Number one, provide 
sufficient financial and other resources so solo physicians are 
able to select and implement HIT system. Number two, consider 
delaying the penalties associated with HIT adoption until such 
a time as a functional integrational system is in place. Short 
of that, consider grandfathering in some physicians and 
exempting them from financial penalties so that they are not 
pushed into early retirement which could further exacerbate the 
physician shortage in this country. And number three, if 
penalties are not delayed, provide a safe harbor for those 
early adopters of HIT to protect them from financial penalties 
related to the meaningful user requirement. They should not be 
punished for the failure of their EHR vendor to implement new 
criteria.
    In closing, I will absolutely continue to incorporate HIT 
because I see its benefits to my practice and patients, and I 
look forward to working with you. And thank you for the 
opportunity to testify before the Committee today.
    [The statement of Ms. Kramer follows:]
    Chairwoman Ellmers. Thank you, Dr. Kramer. And now I will 
yield to Ranking Member Richmond, who is going to introduce his 
witness.
    Mr. Richmond. Thank you, Madam Chairwoman.
    It is now my pleasure and honor to introduce Dr. Denise 
Elliott, who is from Marrero, Louisiana, who practices in 
Marrero, Louisiana. She is a graduate of Loyola University and 
Barrett University of Podiatric Medicine. Dr. Elliott has 
served as an insurance advisor for the APMA and is board-
certified by the American College of Podiatric Surgery. She has 
over a decade of experience as a medical specialist running her 
own practice. So with that I will welcome you, Dr. Elliott, and 
say that we look forward to hearing your testimony.

                  STATEMENT OF DENISE ELLIOTT

    Ms. Elliott. Chairwoman Ellmers, Ranking Member Richmond, 
and members of the Subcommittee.
    I welcome the opportunity to testify before you today on 
behalf of myself and the American Podiatric Medical 
Association. I commend the Subcommittee for its focus on the 
vital issue of how the implementation of health information 
technology and electronic health records under the Medicare 
program will impact small medical practices.
    I am Dr. Denise Lea Elliott and a member of the American 
Podiatric Medical Association and Doctor of Podiatry. 
Currently, I am a solo practitioner and the owner of the Foot 
and Ankle Center in Marrero, Louisiana. I know there are 
members of the Subcommittee who are quite familiar and 
supportive of the podiatric profession, but for those who may 
not know, today's podiatrists are physicians and surgeons 
licensed in the state in which they practice podiatric 
medicine. We are qualified by education and training to 
diagnose and treat conditions affecting the foot, ankle, and 
related structures, and provide the majority of foot care 
services to the Medicare population.
    Podiatrists receive medical education and training 
comparable to medical doctors, including four years of 
undergraduate education, four years of graduate education at 
one of eight accredited podiatric medical colleges, and two or 
three years of hospital residency training. Most podiatrists 
are board certified in podiatric orthopedics and medicine or in 
surgery. I have been board certified in surgery since 2007.
    More than 65 percent of the podiatrists in this country 
practice in one- or two-person groups, usually employing a very 
small support staff and enjoying modest annual revenues. Truly 
the definition of a small business. We face the same challenges 
confronted by all small businesses that must compete in 
marketplaces that do not always provide a level playing field. 
Podiatry practices and other small businesses can and do 
compete successfully against large businesses when the terms of 
that competition are fair. But success becomes difficult when 
the same demands are made upon large and small businesses with 
no consideration of the unique pressures placed on the small 
business.
    Congress is to be commended for recognizing the potential 
value of health information technology to improve patient care 
and produce efficiencies that reduce costs. Chronic diseases, 
such as diabetes, heart disease, and kidney failure have 
devastating effects on patients. Many of these ailments have 
significant effects on the lower extremities and the feet in 
particular. In efficiencies abound in the treatment of such 
disease that could be alleviated through communication and 
record sharing between family physicians, cardiologists, 
nephrologists, vascular surgeons, podiatrists and others. 
Giving doctors the ability to access information on the 
patients they care for in real-time has the potential to 
significantly improve the treatment and the lives of patients.
    At the same time, such communication and coordination 
should save the cost of duplicate tests, reduce emergency care, 
and hospitalization admissions, and decrease the practice of 
defensive medicine. The APMA fully supports this initiative 
that will help podiatrists provide better care for the patients 
they serve. However, Congress' requirement that eligible 
providers implement electronic health care records for Medicare 
over the next five years places an undue financial burden on 
the majority of podiatrists that are small business owners. And 
while we are well aware of the incentive program to encourage 
practitioners such as myself to adopt an EMR program, it in no 
way begins to take into account the great expense that a solo 
practitioner will incur. I do not have access to the economies 
of scale that work in favor of larger practices, nor do I have 
the opportunity to participate in a hospital cost-sharing 
program.
    I have not yet implemented an electronic health record 
system in my office although I have explored and continue to 
explore the possibilities. In addition to the cost, I fear the 
effect it may have on my practice. Typical EMR implementation 
takes anywhere from six to eight months, and I anticipate that 
I will not be able to treat the same patient load during that 
period. To what extent will care be disrupted during the 
procurement and installation process? How long will it take to 
convert all my patient records? Will I be able to adapt to an 
EMR system? Will my staff? How long will it take? And while I 
certainly understand that an EMR system would benefit patients, 
will it ultimately benefit my practice? The worst thing that 
could happen for me and for my patients would be to lose my 
practice because of the cost of implementing an EMR system that 
is supposed to help them.
    It has been daunting to try to figure out where to start 
with the almost 300 certified programs listed on the ONC health 
information technology product list. I am affiliated with West 
Jefferson Medical Center, a large hospital in Marrero, 
Louisiana, so I decided to initially look at a product that is 
utilized by this hospital. It seemed logical to me to put a 
system in my office that would work seamlessly with my hospital 
system and could potentially simplify my efforts in 
establishing electronic health records in my practice. But I 
was astounded at the cost. More than $14,000 in start-up costs 
just for the actual electronic health record software lease. 
The cost for additional hardware, computers, and servers that I 
would have to purchase could run an additional $15,000 to 
$20,000. What do I do about my film x-ray equipment? I have not 
yet tallied the cost to purchase a digital x-ray system that 
would be compatible with an EMR. All of this I might add, at a 
time when Medicare is decreasing my reimbursements for 
radiology services and for physicians.
    I am also evaluating other EMR options, but am consistently 
learning that the software purchased, installation, and 
training costs run approximately $25,000 to $30,000 per system, 
plus additional per doctor monthly fees of up to $600. In 
Washington, D.C., this may not seem like a big deal, but it 
certainly is in Marrero, Louisiana. The current Medicare 
incentive program offers $18,000 this year or next year if I 
implement an EMR program and demonstrate meaningful use for 90 
consecutive days, but it appears payments in subsequent years 
will be significantly delayed. At first, $44,000 over five 
years sounded like a great deal of money but I have learned 
that it will not begin to cover all the costs incurred over 
those five years to become fully compliant with what is hoped 
to be a fully certifiable, reliable, and interoperable system.
    EMR vendors are currently not certified beyond stage one of 
this three-stage meaningful use implementation plan. In fact, 
vendors have only temporary certification of their software 
programs. What happens if the vendor and product I choose is 
not certified for all three stages? If continuing certification 
is costly----
    Chairwoman Ellmers. Dr. Elliott----
    Ms. Elliott. Yes, ma'am.
    Chairwoman Ellmers [continuing]. I am going to interrupt 
you there but I am going to ask the rest of your opening 
statement will be submitted for the record. And just in the 
constraints of time. And I apologize for that because you are 
obviously presenting some very vital information. So thank you.
    Ms. Elliott. Thank you.
    [The statement of Ms. Elliott follows:]
    Chairwoman Ellmers. I will now introduce our next witness, 
Andrew Slavitt. Mr. Slavitt is the chief executive officer of 
the OptimumInsight, one of the largest health information 
technology and consulting companies.
    He has held executive positions with several other health 
care companies. He also worked at McKinsey and Company and 
Goldman Sachs. Welcome. And you have five minutes and we will 
be lenient with you as well.

                  STATEMENT OF ANDREW SLAVITT

    Mr. Slavitt. Thank you, Madam Chair, Ranking Member 
Richmond, members of the Subcommittee, for the opportunity to 
testify today on the barriers faced by small group physicians 
and single physician professionals in adopting and implementing 
health information technology.
    My name is Andy Slavitt. I am the CEO of OptumInsight, and 
we are one of the world's largest health information technology 
companies with about 14,000 people worldwide. And we have 
worked with thousands of physicians to help them implement 
health information technology and help them overcome their 
greatest concerns--cost, uncertainty, and complexity. We have 
learned a lot about what works. Health doctors make the complex 
simple and you will see improvements in productivity and 
adoption. Resist the urge to support efforts even tied to 
financial incentives that do otherwise by adding complexity. It 
is not just technology adoption that is at stake; what is at 
stake is actually the very future of the solo practitioner in 
this country where costs, complexity, and uncertainty are 
driving consolidation into hospitals.
    So to be adopted, technology must meet the needs of 
supporting the physician and the patient in something 
beneficial to them. And it can. Consider how the example of how 
technology could help reduce unnecessary hospital admissions. A 
doctor may see 40 or so patients in a day. Data suggests that 
only a small handful of these patients will drive the majority 
of costs and potential hospitalizations if not treated. Without 
technology, every patient looks alike until the doctor walks 
into the exam room. As the doctor gives our orders for a 
prescription, lab tests, a dietary restriction, those that go 
unfollowed are more likely to end up with a patient needlessly 
hospitalized. Without technology to help, doctors do not know 
who is complying and who is not until the patient shows up in 
the hospital even then, data suggests that doctors only become 
aware of this about half the time, and without the technology 
to trigger a follow-up visit, the chances of a longer stay or 
readmission to up.
    All of these changes require less information technology 
than is used by an airline reservation clerk. In communities 
where this sort of technology adoption is occurring, like Grand 
Junction, Colorado, there is evidence that unnecessary 
hospitalizations, which cost us $30 billion annually, may be 
dramatically reduced. So I would urge us to focus on these 
basic things which simplify a physician's life and add more 
productive time to their day before we focus on more abstract 
requirements.
    So what is it about technology that is creating these 
barriers? Physicians will point to several issues that have 
been brought up on this panel already--costs, legal 
uncertainty, and privacy regulations. But perhaps the greatest 
barrier is simpler than those. Productivity-enhancing 
capabilities that I describe are not today driving the purchase 
and design of this technology. Ironically, in a world where 
cloud computing, mobile technology, and social networking are 
creating low-cost access to a variety of capabilities for 
individuals and small businesses, the typical physician may 
tell you that the technology in their office or hospital has 
often become a contributor to regulatory burdens they face.
    Whether meaningful use standards are right or wrong is not 
the real issue. What is important is that today the end-users, 
doctors and patients, are further away from the actual product 
design because new product development is focused on satisfying 
those regulatory hurdles of a payer, CMS, rather than on simple 
innovations that improve productivity.
    The HITECH Act created important momentum. Approximately a 
third of office-based physicians are currently planning to 
achieve meaningful use of EHRs and apply for incentive payments 
this year. We need to consider that for the rest of the 
physician practices, the smaller ones, the temporary financial 
incentives will not be enough to compensate for productivity 
losses and private sector innovation is at work to demonstrate 
the power of technology where meaningful use is just the 
starting point.
    Our company, OptumInsight offers technology, for example, 
with no upfront costs or maintenance required, no purchase of 
servers, automating the coding process for billing and 
collecting from health plans, and most importantly, it is 
instantly updatable based on the needs of the user right from 
the cloud. The way the world is going, we believe technology 
should be free. Services should cost money; technology is 
becoming more and more a part of the fabric of our lives.
    Our written testimony offers five common sense 
recommendations for Congress. Allowing the requirements and 
regulations placed on physicians in the multitude of programs 
Congress oversees. Second, continue Federal investments in 
HIEs, which should be as essential to CMS as MMIS systems which 
pay Medicaid claims and administer benefits. Third, reduce 
uncertainty over the legal environment. Fourth, provide SBA 
loans, guarantees for small and solo practices and other 
clinicians not eligible for Medicaid meaningful use incentives. 
We understand this to be budget-neutral. Continue support for 
the Regional Extension Centers you heard about on the first 
panel, which are providing to be a strong tool to provide 
expertise to small practices which lack resources.
    In conclusion, I applaud the Subcommittee for focusing 
attention on this issue. Physicians who practice in small 
practices, who were once the cornerstone of health care in most 
communities, are already an endangered species. In the 10 years 
prior to 2007, the percentage of visits to physicians who are 
solo practitioners decreased 21 percent. The trend has only 
grown more severe since. Simplifying the environment for these 
practices and private sector innovation should be the goal, 
while supporting and improving upon the efforts that got 
underway with the HITECH Act.
    Thank you for the opportunity to testify.
    [The statement of Mr. Slavitt follows:]
    Chairwoman Ellmers. Thank you, Mr. Slavitt, for your 
testimony, your opening statement.
    I am going to introduce Dr. Baumer now, our last witness. 
Dr. Baumer is a professor of law and technology at North 
Carolina State University, which I was just there about a week 
ago, in Raleigh, North Carolina. Dr. Baumer has written 
extensively on the security and privacy of electronic medical 
records as well as legal liability in the information age. He 
received his B.A. from Ohio University, his J.D. from 
University of Miami, and his Ph.D. from the University of 
Virginia. Welcome, Dr. Baumer. And you have five minutes for 
your testimony. And I will be equally as lenient with you.

                  STATEMENT OF DAVID L. BAUMER

    Mr. Baumer. Thank you very much. It is a pleasure to be 
here. Actually, it is a pleasure and an honor to address the 
House Subcommittee on Health Care and Technology with 
Congresswoman Renee Ellmers and Congressman Richmond.
    I am the head of the Business Management Department at 
NCSU. I have a Ph.D. in economics and a law degree. I have been 
a member of the bar for 31 years. And within the field of law 
and technology, I have examined security and privacy issues. My 
work has been published in economic, engineering, accounting 
and law reviews. But enough bragging.
    I delivered this speech to my wife and she said tell them 
what you are going to talk about and then get to it. So let me 
just say that I believe the written statement that I provide 
outside fills in a lot of the gaps relative to this PowerPoint 
presentation.
    However, my recommendations to get right to the point are 
that small health care firms should be provided with safe 
harbors in the form of EHR software that insulates them from 
suit by the Federal Trade Commission, by private class actions, 
and by State attorney generals. Secondly, currently there is no 
private right of action under HIPAA, nor should there be. 
Third, small health care providers should not have to be IT 
specialists aware of the latest techniques in combating 
identity thieves. And fourth, a step in the right direction and 
I am gratified to hear this discussion, is certified software 
under ARRA, which creates, I would hope, a due diligence 
defense if somehow a cyber break-in occurs.
    So finally, I would like to point out that removing legal 
uncertainty as we have see will not result in widespread 
adoption of EHR unless other obstacles are dealt with, 
including start-up costs and interoperability. However, going 
back to some of the work that I have done, we have--I have 
worked with people at Carnegie Mellon, Virginia Tech, Georgia 
Tech, examining FTC interventions on behalf of citizens' 
privacy and security. And the FTC has done a very good job. 
They are dealing with some very clever people. But what we have 
found and what we have discussed in the FTC's interventions is 
that the FTC standards for commercially reasonable security 
evolves from case to case. And that is because the IT 
technology continues to evolve.
    So encryption. People talk about encryption. Forty-point 
encryption is no longer state-of-the-art. It is now up to 130 
and it could be higher. So these interventions by the FTC 
create uncertainty in my opinion, even among large firms, but 
certainly small firms are overwhelmed.
    In 2004, I wrote an article, co-wrote internet privacy law 
comparison between the United States and the European Union. It 
was apparent to me that E.U. protection of PII (personally 
identifying information) is much more extensive and effective 
than in the U.S. More recently, I co-authored an article, 
Privacy and Security in the Implementation of Health 
Information Technology: U.S. and E.U. Compared. Now, we start 
with the assumption that there will be significant efficiency 
gains, but there could be some diminution in the privacy of 
medical records. Let me just provide you with some overall 
statistics.
    In some E.U. countries, 90 percent plus of their medical 
records are electronic. In the United States it is fewer than 
50 percent. And it is also true that in economic parlance there 
are significant and positive network externalities associated 
with making all medical records electronic so that there is, 
excuse me, an economic justification for subsidizing startup 
costs.
    All right. I know I was supposed to confine my remarks to 
legal, but these things are interspersed. Let me just jump 
ahead and point out, for example, that HIPAA has over 15 
exceptions in which medical information can be transmitted to 
third parties without patient consent. In the E.U., there are 
only three exceptions, which I would be glad to go into.
    Let me cite a couple quotes and then finish up. There was a 
recent article in November 2010 in the New England Journal of 
Medicine in which it was stated the question is whether EHRs 
will help providers defend against such claims, medical 
malpractice and medical liability, or leave them more 
vulnerable. The answer seems to be it will do both. I am sure 
that is reassuring to providers.
    Compliance with FTC and security protection standards 
necessitates firms to be cognizant of recent FTC actions which 
requires firms to possess substantial expertise in IT. And yet, 
in my opinion, security breaches are inevitable. An article 
written by my colleague, Professor Fay Cobb-Payton at NCSU----
    [The statement of Mr. Baumer follows:]
    Chairwoman Ellmers. I am sorry, Dr. Baumer, I am going to 
stop you there but your testimony will be submitted for the 
record. And I do appreciate that insight regarding all of the 
security issues that we face.
    And I would just further that by saying that you have 
highlighted an area that I think shows just some of the hurdles 
and barriers that we are up against, which is that technology 
keeps building upon itself so quickly and yet we are putting 
this on our physicians who are small business owners. And how 
can our physicians be able to incur that cost and stay up-to-
date with the mandates of meaningful use as those evolve, the 
dollar signs. And I can speak to this on a personal level. In 
our practice, having had IT for probably going on about five 
years now, now in order for us to be compatible with meaningful 
use we are going to have to encounter about another $20,000. 
And that is for the meaningful use as it is applied now and not 
considering the possibilities of changes in the future.
    So thank you, Dr. Baumer. I do have a couple of questions 
and then I will be yielding to our ranking member.
    To Dr. Elliott, I know you have stated that you have not 
put into place your IT yet because of all of the costs that you 
know you are going to have to incur. One, being a podiatrist, 
what is the percentage of Medicare patients that you see? Or 
no, in relation to, I mean, if you could say how many patients 
you see a week and of that, if you have an idea of the 
percentage.
    Ms. Elliott. I see an average of 30 to 40 patients a day, 
four days a week. So 120 to 150 patients. And about 15 percent 
is Medicare. The majority of those Medicare patients are 
hospital-based patients, the patients with the end-stage renal 
disease, diabetics----
    Chairwoman Ellmers. Right.
    Ms. Elliott [continuing]. Being called for wounds or 
amputations----
    Chairwoman Ellmers. Sure.
    Ms. Elliott. [continuing]. Things along that line. The more 
severe type of foot conditions.
    Chairwoman Ellmers. So I guess the question is, and of 
course this is completely your opinion, is it cost effective 
for you to incur the cost for health IT in relation to the 
possibility of future penalties that you may incur? Because as 
you have seen as of 2015, the penalities will increase and will 
be sustained. Can your practice take on that penalty if you do 
not implement the IT?
    Ms. Elliott. My practice can because it is a small 
percentage of my practice. So that one percent then becomes two 
percent and three percent but it is only 15 percent of my 
practice. So if I was going to do a cost analysis and I had to 
outlay all of this money, for me it might be a better financial 
decision not to implement it.
    Chairwoman Ellmers. Not to implement it at all.
    Ms. Elliott. Correct. And my big fear is what my colleague 
here went through where you do spend all this money and in the 
future things change and you have to start over again. I 
already have 11,000 patients. I have to convert all those 
records from paper to electronic. Now I have to go with a 
different company and I have to convert again. Those are all 
costs that are involved once you convert from one system to 
another system because it is not ready for the second phase or 
it has gotten booted out or bought out by a bigger company. So.
    Chairwoman Ellmers. There again, the implementation and the 
changes in the technology world are really affecting us 
directly because, how can we comply with these issues? And that 
is one of our concerns. And I thank you for that.
    I will now yield to Ranking Member Richmond.
    Mr. Richmond. Dr. Elliott, I know that you did not get a 
chance to finish your testimony but I believe in the portion of 
your testimony that you did not get to talk about you talked 
about your concerns about meaningful use criteria. So I will 
ask you, consistent with what you said, that we have heard from 
providers who are concerned that they will not meet the 
ambitious definition of meaningful use goals required for stage 
one demonstration. And do you believe widespread adoption can 
be accomplished within CMS's aggressive timeline? And are there 
unique challenges to specialists in this area?
    Ms. Elliott. I think that most of the subsystems out there 
are designed for your primary are physicians. So as far as the 
specialists, I think it is a little more challenging. I think 
you have to go with a smaller company that is going to cater to 
my specialty, which will not necessarily integrate as well with 
the larger hospitals. Then there is interface fees. If you want 
to try to connect with a smaller company to a larger company. 
So I think it will be a challenge. I would love to see more 
efforts being placed on the specialist as far as the software 
vendors. I think it is possible from a timeline to put this in 
practice, to answer that question.
    Mr. Richmond. The other one, and this question would be for 
Dr. Elliott and Dr. Kramer. A lot of times, I guess, there are 
not clear instances of where reality and theory just do not 
meet. And when we talk about the incentive program, and I am 
curious especially for both of you as small practitioners 
where, Dr. Elliott, I think you said that you estimate spending 
$25,00 to $30,000 to implement, you may be reimbursed $18,000. 
And that is after a 90-day period of demonstrating use. Then 
four to eight week after that. Is that just a reasonable 
timeline or reasonable expectation to expect a small 
practitioner to be able to front that money and float all of 
the necessary bills and recoup it at the end? And at the end of 
that question, do you all have the access to capital to, if you 
do not have the money within your budget, are there lenders out 
there willing to lend you that money to get you through that 
hurdle?
    Ms. Elliott. Do you want to go? I know the software 
companies I have looked at, some of them have invested in 
different loaning programs. So the individual vendors have 
partnered with banks or loaning institutions. But now you are 
taking on a loan. You are taking on a business loan. It would 
not be a desirable thing for me as a small business owner. So, 
of course, it would put a kink in your cash flow if you had to 
outlay all this money and then wait for the timeframe for it to 
come back to you. So.
    Ms. Kramer. I think it is difficult for many practices. 
Most of the companies do give you a 12-month lease period where 
you divide the payments over a year. And so that makes it more 
manageable. But it is still a large amount of money at the 
beginning, which you basically just, as a small business owner, 
you are the last person to get paid. So you pay yourself last, 
you save money, and I mean, I would much rather do that than 
take out a business loan.
    Mr. Richmond. And my last question, what was the decrease 
in the number of patients you could visit while you went 
through your installation and your 90-day?
    Ms. Kramer. It is very significant because it is not just 
me who has to learn how to use it but it is the front desk 
staff who has to register the patient, get the information in 
the system. The nurses have to enter the medications and 
allergies. So the first week I saw one patient an hour. And I 
normally see between four, six, seven patients an hour. So that 
is a huge--not only do you have to front the cash for the 
system but it is a big dip in your cash flow for the month or 
months. Usually it takes approximately six to nine months for a 
practice to get up and running fully with the system. So it 
took me about four to six weeks but the average, I believe, is 
six to nine months.
    Mr. Richmond. Wow.
    Ms. Kramer. Yeah.
    Mr. Richmond. According to my quick math over here, I mean, 
that is almost a reduction from anywhere of 75 percent to 85 
percent of the number of patients you can see, which reduces 
your income 75 to 85 percent during this time period.
    Ms. Kramer. It is huge.
    Mr. Richmond. Thank you.
    Ms. Kramer. And I am looking at having to do it all over 
again and that is really concerning. And I also mentioned that, 
you know, a lot of practices, especially in my field, there is 
a huge wait period to see specialists. I am booked five to six 
months out and so that just puts me even another month behind.
    Mr. Richmond. Thank you so much.
    Ms. Kramer. Thank you.
    Mr. Richmond. All of you.
    Chairwoman Ellmers. Thank you. And I now yield to Ms. 
Herrera Beutler for her questions.
    Ms. Herrera Beutler. Thank you. And Mr. Richmond kind of 
asked what I was thinking. How long is the recoup time? You 
know, exactly what you said. I was thinking you have to front 
the money upfront. You have to put the cash down and then you 
are not having the same revenue that you had in months 
previous.
    Ms. Kramer. Correct. Yeah.
    Ms. Herrera Beutler. So nine months? How long does it take 
you to break even? Did you break even up to this point and now 
you are having to look at another IT provider?
    Ms. Kramer. Yeah. It probably takes, I would say, to 
increase productivity--I mean, in my mind there is no doubt 
that over the long term it will increase productivity. I mean, 
I have fewer staff and if I had paper charts I do not have 
someone that has to be pulling charts, etcetera. But I think it 
would probably take several years to turn a profit. I would 
think three, four, five, six years.
    Ms. Herrera Beutler. So it is a long-term investment.
    Ms. Kramer. Yes, it is.
    Ms. Herrera Beutler. I was disappointed not to have our 
previous panel here. I did not know they were going to leave or 
I would have asked them to stay because I think it is 
incredibly important for them to hear. And I was trying to get 
at it a little bit what happens to the small and solo guys who 
run into a problem like this. There is no real hold harmless, I 
think, in a contract for you.
    Ms. Kramer. Nothing----
    Ms. Herrera Beutler. Is there anything that even as you are 
negotiating with vendors, is that something that you can 
require? Or do you need--or are they just going to kind of 
laugh at that?
    Ms. Kramer. Yeah, I asked and I asked, you know, the new 
vendors that I was interviewing and they said, yes, you know, 
our company is stable. But what does that really mean?
    Ms. Herrera Beutler. Thank you for that.
    I wanted to also ask Dr. Baumer, I had a physician in my 
office a few weeks ago and they were talking to me. You kind of 
came at the security portion from the cyber attack side of it 
and you mentioned med-mal, but in terms of discoverability, I 
have had physicians say, look, once I put all this on line it 
is discoverable in a med-mal case. What is the case with paper 
records? And is that something you are hearing? Is it the same?
    Mr. Baumer. I do not think that there is a difference 
between paper records in terms of discoverability and 
electronic records.
    Ms. Herrera Beutler. You know what? Part of what he was 
saying was so you have this great new metrics, right, you put 
the information in and they can--then the computer can generate 
are you looking at this? Are you looking at this? Are you 
looking at this? Well, a physician may be looking at certain 
criteria. It is probably not one of these one percent chance it 
is one of these other things, but if the computer brings it up 
there is a one percent chance and you did not go after it, is 
it expanding your liability exposure?
    Mr. Baumer. Well, I think that is a very good question. I 
mean, if the computer puts out four or five scenarios, do you 
have a due diligence obligation to investigate each of these? 
And, you know, that problem, however, has been dealt with for 
some time. There is kind of recommended treatment and then 
physicians reject that and use their own judgment. So I am not 
sure that because we have electronic records that that is going 
to be a new source of liability. But as that New England 
Journal points out, we do not know. And there has not been, you 
know, hopefully in the long run, but people cannot hold their 
breath in the long run, that we will have a reduction in 
liability. I think that most of these providers are very 
concerned about lawsuits from people they do not even know 
about issues that they are not trained about, namely IT issues, 
which Mr. Slavitt might be able to talk about.
    Ms. Herrera Beutler. Did you have a thought?
    Mr. Slavitt. Yeah. I think there is a slight difference, 
Congressman, and that difference is that in a paper record it 
may say that a patient is taking certain medication. Now, an 
electronic system may say because this patient is taking this 
medication do not give them this treatment or there is going to 
be a bad interaction. And so I think the fear is that that 
creates a level of liability. Invisibility in the liability 
that did not exist before. So what we obviously need to do is 
encourage the development of--encourage people to learn and 
improve and not penalize people for improving. And to self-
report and so forth. That type of environment, I think, you 
know, will balance the needs and interests of the patient with 
the, I think, very real concerns of a physician to make sure 
that they do not get penalized for effectively trying to 
advance the care they are delivering.
    Ms. Herrera Beutler. Absolutely. Thank you. I yield back.
    Chairwoman Ellmers. Thank you. And I now yield to Mr. 
Hanna. Mr. Hanna, you are fine? With that I will----
    Mr. Slavitt, I did have a couple of questions along the 
same lines of what we were just discussing. With the incredible 
rate of innovation in technology and the changes and all of the 
concerns that you have brought up, and you did an excellent job 
of outlining some of the areas that we need to address, with 
that I just want you to elaborate a little bit more on the cost 
and the time that it does take for our physician offices to 
implement this. You know, many times the software company, the 
vendor will say, within three months you will be up and running 
and you are going to turn a profit. Realistically, and I know 
Dr. Kramer you had outlined, you know, six to nine months. And 
each office is certainly going to be different based on the 
number of employees that will be working with it, and the time 
that the physician can afford to devote to it. In your opinion, 
are those costs and time estimates underestimated? Because that 
was certainly our experience.
    Mr. Slavitt. Sure. It is a great question and I think Dr. 
Kramer's story is really probably one of the most important 
cautionary tales for what can be avoided. And, you know, I 
think that to the extent that we think physicians and a large 
integrated delivery system and in Geisinger where you have come 
from, you have got to think of it very differently than small 
business, solo practitioners, who are very much--they are very 
much consumer professionals all at the same time. And they need 
to be treated differently. And so, you know, if you think about 
what companies like Intuit charge for practice software for a 
small business, for a small physician office where they have 
75,000 physicians, it is very small. The training time is easy. 
It is a very intuitive set of applications.
    Likewise, you know, I do not think there is a great future 
in charging individuals $75,000 to install technology in their 
offices and maintain it. We all know that is not the direction 
things are going. If you are not happy with Google, you switch 
to Microsoft. And if you are not happy with Microsoft, just 
switch to Google. That is the environment that needs to be 
stimulated out of ONC here. And I think there is good news and 
I think the kind of questions that I think need to be asked 
when talking to vendors are how updatable? Can it be delivered 
through the cloud? Can you provide guarantees that I can reach 
meaningful use? Can you give me a money back guarantee on the 
loan if I do not reach meaningful uses? And the competition--
the good news is that some of the competition that has been 
spurred are actually driving in that direction. It clearly has 
not gotten out to you, Dr. Kramer, but that is what needs to 
happen.
    Ms. Ellmers. Thank you so much. And at that I will say 
thank you to our panel. This will conclude our hearing today.
    This Subcommittee will continue to closely follow and take 
into account all of your comments and concerns, and I certainly 
do appreciate your time. We will be sending a letter to CMS on 
the e-prescribing incentive program proposed rule during the 
comment period that is now currently in effect.
    I ask unanimous consent that members have five legislative 
days to submit statements and supporting materials for the 
record.
    I have an article here that was just posted in Medscape 
Medical News and I will just briefly touch on it. Centers for 
Medicare and Medicaid Services, CMS, is proposing more 
exceptions to an electronic prescribing requirement that could 
penalize as many as 109,000 physicians, nurse practitioners, 
and other prescribers who do not adopt the technology. The 
title of the article is E-Prescribing Penalty Could Hit up to 
109,000 Clinicians.
    With that, this meeting is adjourned. [Whereupon, at 11:57 
a.m., the Subcommittee hearing was adjourned.]

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