Health IT EHR Opportunity September 22, 2009 Paul M. Lee John M. Kirsner, Esq. Strategic Health Care Squire, Sanders & Dempsey L.L.P. Senior Partner Partner, Health Care and Life Sciences (202) 266-2600 (614) 365-2722 paul.lee@shcare.net jkirsner@ssd.com Scott A. Edelstein Squire, Sanders & Dempsey L.L.P. Partner, Health Care and Life Sciences (202) 626-6602 sedelstein@ssd.com
Overview • Purpose of Today’s Presentation • Proposal for Hospital/Physician collaboration: – Creation of Health IT MSO/Association • HITECH Act • Legal Issues • Next Steps • Questions 2
Purpose of Today’s Presentation • Determine hospitals’ interest in developing a not-for-profit organization to help them implement an EHR physician alignment strategy. 3
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.” 4
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 5
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 6
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. 7
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 8
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 9
National HIT MSO/Association Example IT Vendor EHR Software, $300 Million Hardware, etc. Customer Hospital Group retains $140 Hospitals Million to fund enhancements to Medicare EHR, support National HIT Assn., (20) local MSO, etc. $440 Million EHR Services Physicians (10,000) 10 10
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) 11
Operational Flow Chart Hospital Physicians Equity Return Medicare MSO/ Nat’l Physician Vendor Association HIT Assn. Medicaid 12
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. 13
Facilitator MSO Structure – Option 1 Hospital/Physician JV Hospital Physicians Management and Equity Return Purchasing Contract National MSO/ Association Local MSO/ Facilitator HIT Management Contracts Medical Staff Members 14
Facilitator MSO Structure – Option 2 Hospital Subsidiary Hospital Management and Equity Return Purchasing Contract National MSO/ Association Local MSO/ Facilitator HIT Management Contracts Medical Staff Members 15
Facilitator MSO Structure – Option 3 National MSO/Assn./Physician JV Physicians National MSO/ Association Management Equity Return and Purchasing Contract Local Facilitator/ MSO HIT Management Contracts Physicians 16
HITECH Act 17
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 18
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 19
Medicare Incentive Payment Schedule Year First Year First Year First Year First Year Payment Payment Payment Payment 2011 2012 2013 2014 2011 $18,000 - - - 2012 12,000 $18,000 - - 2013 8,000 12,000 $15,000 - 2014 4,000 8,000 12,000 $15,000 2015 2,000 4,000 8,000 12,000 2016 0 2,000 4,000 8,000 2017 0 0 0 0 Total $44,000 $44,000 $39,000 $35,000 Total with $48,400 $48,400 $42,900 $38,500 HPSA 10% 20
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 regs by Spring 2010. 21
Legal Issues 22
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 23
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 • Call participants will be emailed a questionnaire and advisory. We want feedback! • Interested Board members: please email Paul Lee at Strategic Health Care – Paul.Lee@shcare.net – First Board conference call is scheduled for next week – No financial obligation at this time 26
Questions?
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