Nearly two years ago, the ONC established the State Health Information (State HIE) Exchange Cooperative Agreement Program, a federal-state collaboration which funds states’ efforts to rapidly build capacity for exchanging health information across the healthcare system both within and across states. To receive the grant money, states were required to provide state strategic and operational plans and are required to submit a financial sustainability plan to the ONC by 2012. In total, 56 states, eligible territories and qualified State Designated Entities (SDE) received awards, the total funding for which is approximately $546 million.
In early 2011, the ONC made an additional 16 million available to states through its Challenge Grants program, which provides funding to states to encourage breakthrough innovations for health information exchange that can be leveraged widely to support nationwide health information exchange and interoperability. Through the awards, selected states were tasked with creating and implementing up-to-date privacy and security requirements for their HIEs, monitoring and tracking meaningful use HIE capabilities in their state, setting strategies to meet gaps in HIE capabilities, ensuring consistency with national standards.
According to a recent survey, however, state officials are worried about how to keep paying for these programs once the federal money runs out by 2015. The survey by iWatch News, the Center for Public Integrity’s online publication dedicated to investigative and accountability claims that while many states have had to establish their HIE from the ground up, a few had theirs in place through a mixture of state and private funding before the federal money came in. Of the states and territories who responded to the survey, all 51 expect to have a working exchange in place by late 2014 or early 2015.
The survey reveals that states in the beginning stages of their HIE are using a majority of the federal money on strategizing, designing and implementing their program while also paying software vendors for the technology infrastructure. These states don’t expect additional support from the federal government, so keeping their HIE sustainable is a matter of significant concern. According to Julia Adler-Milstein, who has conducted formal evaluations of 27 states for ONC as a subcontractor for a University of Chicago-based research group, “The message coming out of every state is that they haven’t figured out the sustainability piece.”
The state HIE sustainability issue comes at a time when state economies are in the midst of the worst economic downturn since the Great Depression. A total of 44 states experienced budget shortfalls in their 2009 and 2010 budget years and in the first months of the 2011 state fiscal year, 46 states were dealing with shortfalls. With the unstable fiscal environment, state HIEs are faced with increased financial challenges and additional hurdles in advancing interoperability.
HIEs at the state level should first develop, along with professionals from the healthcare industry, a business plan to examine the ongoing challenges of sustaining their infrastructure for interoperability without government funds. It is also important that state laws and cultural issues are considered in the planning and development process.
Grant money and other temporary funding should only be used for startup and implementation costs for state HIEs. Therefore it’s necessary for them to consider the costs in not only starting but also maintaining and sustaining their HIE. The ability to fund the administrative and operational costs of a state HIE is integral to its sustainability. HIEs often involve a high cost of operation, an issue state HIEs should consider as they evaluate various revenue streams.
Many financial models exist, but it is still too early to conclude which is most likely to lead towards sustainability. Funding can be received through stakeholder contributions, subscriptions fees, transaction fees, common and collaborative funding from physicians and payors and through private investments. HIEs can also choose to roll some of their revenue into value-added services for which customers are willing to pay, creating additional revenue.
Some state-run HIEs are providing value-add services specifically for providers. These services increase the sustainability proposition of the HIE by solving business problems for the provider members that purchase them. In order to be successful, state HIE officials can offer incentives for exchanging data from electronic health records (EHRs) to achieve cost and efficiency benefits. Those state officials should establish dedicated revenue sources for long-term HIE operations, and they may need to assist with broader statewide functionality.
It is essential that HIEs, especially at the state level, understand what it means to be sustainable, the costs involved in supporting not only the organization but also the core and value-add services and the revenue streams that will be the most viable options for sustainability now and in the future. Bringing interoperability to scale is an developmental process that requires reliable and sustained funding, and states have been given an unprecedented opportunity to make substantial leeway in developing a sustainable model for an HIE.