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Health IT EHR Opportunity September 22, 2009
John M. Kirsner, Esq.Squire, Sanders & Dempsey L.L.P.Partner, Health Care and Life Sciences(614) [email protected]
Scott A. EdelsteinSquire, Sanders & Dempsey L.L.P.Partner, Health Care and Life Sciences(202) [email protected]
Paul M. LeeStrategic Health CareSenior Partner(202) [email protected]
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Overview
• Purpose of Today’s Presentation
• Proposal for Hospital/Physician collaboration:
– Creation of Health IT MSO/Association
• HITECH Act
• Legal Issues
• Next Steps
• Questions
Purpose of Today’s Presentation
• Determine hospitals’ interest in developing a not-for-profit organization to help them implement an EHR physician alignment strategy.
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New HIT MSO/Association• Not-for-Profit
• Financed by Government
• NOT a “one size fits all!”
• Board members comprised of hospital CIOs
– Hospital CIO committees created to:
• Advise MSO staff/attorneys on direction
• Advise on the creation of legal documents
• Negotiate with vendors (hardware, software, etc…)
• Advocate for regulatory changes to “meaningful use.”
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New HIT MSO/Association– MSO would:
• Create all documents establishing MSO as legal entity
• Manage all Committees – like association
• Be a resource (legal, marketing, etc…) to each hospital member
• Recommend solutions to group and individual implementation issues
• Advise Board and members on all issues regarding the successful management of the MSO
• Under the direction of the Board, adjust MSO mission based on member needs
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Benefits • Leverages buying power of multiple physicians
at a national level for better pricing from vendors – hardware & software
• Better pricing may result in pool of additional funds to meet future EHR needs
• Helps physicians maximize eligibility for incentive payments
• Brings together hospitals and physicians through an integrated, seamless EHR system
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Benefits• “Free” to physicians – funded through HIT payments
• Turnkey solution for physicians
• One-stop shop for technology acquisition, implementation, maintenance and related support
• Manages complex regulations regarding meaningful use and other legal requirements, and monitors compliance
• Potential for Hospital/Hospital alignment through outsourcing of CIO/IT expertise of larger hosptals/systems to smaller hospitals/systems.
Benefits• Ensures consistency in implementation
• Can be a step in a clinical integration program or accountable care organization program or medical home program
• Seasoned legal advice for physicians and hospitals
• Ability to obtain federal and state grant funding in which all participants can benefit
• Provides peer-to-peer opportunities for CIOs
• Organization “owned” by hospitals
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Advantages• COMPETITIVE ADVANGE FOR MEMBERS
– Only one hospital/system in each community
• NOT a Health IT Regional Extension Center
– Will use the services of the RECs to provide further advantages to member hospitals
– Not entangled with same government limitations
• NOT vendor-centric
– Hospitals/physicians can select own vendor
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National HIT MSO/Association Example
1010
Medicare
Customer
Hospitals
(20)
IT Vendor
Physicians (10,000)
$440 Million EHR Services
$300 Million EHR Software, Hardware, etc.
Hospital Group retains $140 Million to fund enhancements to EHR, support National HIT Assn., local MSO, etc.
Advisory Committee• Mike Bundy, CIO, Wellmont Health System (TN)
• Tom Gregorio, CIO, Newark Beth Israel MC (NJ)
• Arlo Jennings, CIO, Mission Hospitals (NC)
• Tom Johnson, CIO, DuBois Regional MC (PA)
• George Morris, CIO, Northwest Community (IL)
• Dana Moore, CIO, Centura Health, (CO)
• Dave Selman, CIO, ProMedica, (OH)
• Martin Tursky, CIO, Aultman Hospital (OH)
• Will Weider, CIO, Ministry Health Care (WI)
• Bernie Clement, CIO, East Jefferson General (LA)
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Operational Flow Chart
Medicare
Medicaid
Physician MSO/
AssociationVendor
Equity Return
Hospital Physicians
Nat’l
HIT Assn.
Creating the National HIT Association
• Budget under development
– Needs CIO input
– Dues and vendor support
– Government payments through physicians reimburse all members
• Not-for-Profit entity would contract with Strategic Health Care for staff support services. ED, hired by Board, would run organization day to day.
• NFP entity would contract with Squire Sanders for legal, regulatory, compliance services.
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Facilitator MSO Structure – Option 1 Hospital/Physician JV
National MSO/ Association
Local MSO/Facilitator
Hospital Physicians
Equity Return
Management and
Purchasing Contract
Medical Staff Members
HIT Management Contracts
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Facilitator MSO Structure – Option 2 Hospital Subsidiary
National MSO/ Association
Local MSO/Facilitator
Hospital
Equity Return
Management and
Purchasing Contract
HIT Management Contracts
Medical Staff Members
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Facilitator MSO Structure – Option 3 National MSO/Assn./Physician JV
National MSO/ Association
Local Facilitator/
MSO
Physicians
Equity ReturnManagement and
Purchasing Contract
Physicians
HIT Management Contracts
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HITECH Act
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HITECH Act
• American Recovery and Reinvestment Act of 2009 (Stimulus Law) provides $36 billion in funding for health information technology (HIT) and health information exchange (HIE) development
• Incentive payments to encourage hospitals and eligible professionals to adopt and use certified EHR systems
• Successful implementation of the HITECH Act would transform the healthcare system
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Incentives for Physician Participation
• Additional health program payments to eligible professionals demonstrating “meaningful use” of EHR
• Penalties:
– Phased-in reduction of Medicare payments for eligible professionals not implementing “meaningful use” of EHR
– Medicare payment reductions will begin in 2015 for an eligible professional who is not a meaningful EHR user
– Reductions to the otherwise-payable fee schedule for covered professional services shall equal:
• 2015: 1%; 2016: 2%; 2017 and thereafter: 3%
• 2018 and beyond – Secretary can further reduce payments by up to 5% if less than 75% of eligible professionals are meaningful EHR users
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Medicare Incentive Payment Schedule
Year First Year Payment
2011
First Year Payment
2012
First Year Payment
2013
First Year Payment
20142011 $18,000 - - -2012 12,000 $18,000 - -2013 8,000 12,000 $15,000 -2014 4,000 8,000 12,000 $15,0002015 2,000 4,000 8,000 12,0002016 0 2,000 4,000 8,0002017 0 0 0 0Total $44,000 $44,000 $39,000 $35,000Total with HPSA 10%
$48,400 $48,400 $42,900 $38,500
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Meaningful EHR User - Definition
To demonstrate meaningful use of EHR, an eligible professional must satisfy three requirements:
1. Demonstrate use of certified EHR technology in a meaningful manner, including use for electronic prescribing
2. Demonstrate that certified EHR technology provides for electronic exchange of health information
3. Report on clinical quality measures using the EHR technology
Refer to advisory committee recommendations. Final HHS regsby Spring 2010.
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Legal Issues
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Legal Issues to Consider
• Anti-Kickback Statute, 42 U.S.C. § 1320a-7b(b) and 42 C.F.R. §§ 1001.951 et seq. – Group Purchasing Safe Harbor protects the National HIT
Association
– Personal Services Safe Harbor and adherence to fair market value principles protects the MSO Facilitator structure
• Stark Law, 42 U.S.C. § 1395nn and 42 C.F.R. §§ 411.351 et seq.
– No physician participation and no physician referrals at national level means no Stark issue for the National HIT Association
– MSO Facilitator implicates Stark law but several exceptions exist to immunize structure
Legal Issues to Consider
• Tax-Exempt Implications– Only applies to non profit tax exempt hospitals, not to
for profit hospitals
– Established legal principles provide comfort in joint venture setting for MSO Facilitator
• Control considerations
• Revenue sharing considerations
• Antitrust Implications – Antitrust “safety zone” protects group purchasing
aspects of National HIT Association and related purchasing structure
Legal Issues to Consider
• The Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. §§ 1320d et seq. and 45 C.F.R. §§ 160 & 164 (HIPAA)
• Securities Law Implications
• State Regulatory Considerations
– State “Stark” Law
– State Anti-Kickback Statute
– State health and medical records laws
Next Steps
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• Call participants will be emailed a questionnaire and advisory. We want feedback!
• Interested Board members: please email Paul Lee at Strategic Health Care
– First Board conference call is scheduled for next week
– No financial obligation at this time
Questions?
Health IT EHR Opportunity September 22, 2009
John M. Kirsner, Esq.Squire, Sanders & Dempsey L.L.P.Partner, Health Care and Life Sciences(614) [email protected]
Scott A. EdelsteinSquire, Sanders & Dempsey L.L.P.Partner, Health Care and Life Sciences(202) [email protected]
Paul M. LeeStrategic Health CareSenior Partner(202) [email protected]
