EHRs: Where are we now?

May 20, 2005

Uncle Sam doesn't want to pay for it, but he wants you to buy an EHR anyway. Our consultants' recommendations? Wait a while.

Catherine R. Landers, a solo internist in Skokie, IL, hopes to have an electronic health record someday. But right now, she's just trying to stay in business.

Having grown tired of paying a billing service 8.5 percent of her revenues, Landers recently brought her billing in house. She's now submitting her claims on a new McKesson practice management system that costs her $650 a month. But during the transition, she submitted about $30,000 worth of paper claims to her Medicare carrier, which was very slow in paying them. She doesn't see how she can even stay in Medicare if the program makes good on its promise to lower its payments next year. At this point, she certainly doesn't envision how she could afford an EHR.

Landers is hardly alone. About 85 percent of primary care physicians still don't have EHRs, and one of the main obstacles is the expense, which can run to $30,000 per doctor or more. The looming Medicare fee cuts are expected to worsen the situation.

That being the case, why isn't the government pumping more funds into the initiative? The short answer is the budget crunch. With little money to spare for new domestic programs, the Bush Administration has placed its faith in the private sector's ability to carry the ball.

That faith has been rewarded to some extent. Some health plans and employers are trying to expand the use of healthcare IT. The HMOs in California's Integrated Healthcare Association, for instance, are paying physician groups a bonus for acquiring information technology. So is the corporate-sponsored Bridges to Excellence program, which is targeting both large and small practices. Plans such as Wellpoint and Tufts Health Plan have given away e-prescribing software and computers to doctors in their networks. And payers, vendors, and medical societies have joined a private-sector initiative to certify EHRs.

While these efforts haven't touched the vast majority of doctors, they're all part of the national focus on the computerization of healthcare. And the government's IT initiative, by intensifying that focus, will eventually touch you.

So here's what you need to know.

Pay for performance: Does it require an EHR? Although CMS isn't yet offering physicians any direct financial incentives to purchase electronic health records, it's planning to start a pay-for-performance program for small offices later this year. That pilot initiative is likely to be launched in Arkansas, California, Massachusetts, and Utah Under the pilot, physicians would get a small bonus when they acquired some form of information technology, such as an electronic registry or an EHR, and more when they used it to meet CMS' quality goals. According to FP William C. Rollow of CMS, a physician could qualify for between $5,000 and $20,000 a year, depending on his performance and on how many Medicare patients he has.

Some observers, however, believe CMS will pay far less if a doctor simply acquires information technology. If the award is only $2,000 a year, and doctors have to spend $25,000 on an EHR, "the question is whether it's really enough to bring small practices into the information age," says internist David Brailer, National Coordinator for Healthcare Information Technology (a post established last year by the Bush Administration).