Vendors Blocking Interoperability

By Christine Kern, contributing writer

One analyst argues that the feds should stop HITECH payments to lower vendor interop fees

The solution to lowering “outlandish” vendor interoperability fees is for the federal government to curtail HITECH incentive payments and stop trying to regulate how much EHR vendors charge providers for interoperability and focus on pay-for-performance efforts, according to Niam Yaraghi, a Brookings Institution policy analyst. “The best solution for the government is to do nothing,” Yaraghi wrote.

“The new pay for performance payment methods in which the medical providers are being paid a fixed amount for treating patients would drive them to become more efficient and increase their profit margin by seeking solutions such as health information exchange to cut costs. Because the market for new EHR products is now saturated, the only revenue source for EHR vendors is charges for data exchange. Currently, they can get away with outlandish charges because they know the incentives from the federal government allow doctors to cover their costs,” he asserts.

According to Health IT Outcomes, incentive payments under the HITECH Act have been unsuccessful in increasing EHR adoption, as revealed by a draft paper published by the National Bureau of Economic Research. And data from the ONC provided in December 2014 demonstrated that since the enactment of HITECH in 2009, 62 percent of physicians who adopted health IT tools identified financial incentives and penalties as a major influence on their decision to adopt, compared with only 23 percent of physicians who adopted before 2009.

But Yaraghi says regulating and incentivizing interoperability is not working, as iHealth Beat writes. He argues EHR vendors “have taken patient data hostage and are not willing to release it unless they receive a big ransom,” and notes, “They typically claim that technical problems limit the interoperability of their products” and charge significant fees to allow providers to exchange data.

To address the issue, Yaraghi argues the federal government has three choices:

1. Pay the EHR vendors’ “outlandish” prices to release data and allow data sharing;
2. Regulate the industry and make EHR vendors allow such data sharing; or
3. Take no action.

Yaraghi concludes the “government appears to be following the first plan” noting, “The [EHR] incentives, which were initially planned to encourage physicians, will end up with EHR vendors and help drive future profits.” Regulation would “take a very long time to become tangible,” and thus is not a feasible path either.

Instead, Yaraghi argues, now that the use of EHRs has become the norm rather than the exception, which was the ultimately goal of the HITECH Act, the incentive payments should be stopped. “A big chunk of the MU stage 3 incentives will end up paying EHR vendors and therefore will not incent physicians to actively engage in health information exchange,” Yaraghi told Health Data Management in an e-mail.

“Given the current situation, these incentives would never have the intended effects since a big part of them will be wasted on paying EHR vendors rather than physicians. I think the government (should) stop the HITECH incentives. If these incentives were to disappear, the EHR vendors would do anything they can to make a fair deal with providers and payers for their exchange fees. ONC will most likely continue to spend the money, but we should not expect a tangible return on the investment.”