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August 20, 2010

Electronic Health Record Incentive Program

Proposed Rule

Score: 25 / 60

RULE SUMMARY

This proposed rule would implement the provisions of the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub. L. 111–5) that provide incentive payments to eligible professionals (EPs) and eligible hospitals participating in Medicare and Medicaid programs that adopt and meaningfully use certified electronic health record (EHR) technology. The proposed rule would specify the—initial criteria an EP and eligible hospital must meet in order to qualify for the incentive payment; calculation of the incentive payment amounts; payment adjustments under Medicare for covered professional services and inpatient hospital services provided by EPs and eligible hospitals failing to meaningfully use certified EHR technology; and other program participation requirements. Also, as required by ARRA the Office of the National Coordinator for Health Information Technology (ONC) will be issuing a closely related interim final rule that specifies the Secretary’s adoption of an initial set of standards, implementation, specifications, and certification criteria for electronic health records. ONC will also be issuing a notice of proposed rulemaking on the process for organizations to conduct the certification of EHR technology.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion	Score
Openness
1. How easily were the RIA , the proposed rule, and any supplementary materials found online? The proposed regulation turns up at or near the top of the list on regulations.gov in a keyword and RIN search. The HHS website does not have any obvious links to the proposed regulaiton. However, in a search on "electronic health records proposed rule," the very first item on the list is a press release on the proposed rule, which has a link to the part of the HHS website where one can find a link to the proposed rule.	5/5
2. How verifiable are the data used in the analysis? Some data sources are cited, but not linked. A great deal of unspecified internal data is used. For example, figures on numbers of providers are simply sourced to "Medicare claims data."	2/5
3. How verifiable are the models and assumptions used in the analysis? A brief paragraph at the end of the analysis lists source organizations HHS relied upon for studies and conversations, but it lists few actual source documents. The analysis cites two peer-reviewed studies (with links) that find wholesale adoption of electronic health records is low. Peer-reviewed studies are cited to support projected adoption estimates. Cost assumptions, and costs allowed in the regulation, are based on government and consulting firm studies.	3/5
4. Was the analysis comprehensible to an informed layperson? The major analysis is in the RIA section, which is much more readable than the rest of the preamble. Calculations are usually explained well. It is not clear how the analysis derived the "high scenario" assumptions from the literature cited, and it is not clear how the "low" scenario differs from the baseline. The analysis uses a number of acronyms that would not be familiar to someone who is not an expert in the field.	3/5
Analysis
5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?	3/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life? The first paragraph in the preamble states, "Expanded use of health information technology (HIT) and EHRs will improve the quality and value of American health care." Tables on the "Criteria for Meaningful Use" (pages 1868–1870) lays out the intended health outcomes, but doesn't elaborate on them. It also discusses on page 1987 how it can help deliver health care more efficiently.	4/5
Does the analysis identify how these outcomes are to be measured? The analysis identifies the number and percentage of doctors and hospitals who are "meaningful users." It presents high and low scenarios for both. This is a measure of use of EHRs (at best an intermediate outcome), but not a measure of ultimate outcomes.	3/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes? Basics of a theory are laid out but not elaborated in great detail: Incentive payments will encourage providers to adopt electronic health records more quickly than they otherwise would. Increased adoption will lead to better care and lower costs.	3/5
Does the analysis present credible empirical support for the theory? One CBO study is presented to make the case that the regulation will lead to benefits; a few other reports are cited regarding adoption rates.	3/5
Does the analysis adequately assess uncertainty about the outcomes? The analysis acknowledges numerous uncertainties that could affect adoption, and it presents high and low estimates. No discussion of how probable either is, and the analysis says no data exist that could be used to determine this.	3/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?	1/5
Does the analysis identify a market failure or other systemic problem? There are a few passing references to benefits to society that, perhaps, providers cannot capture. But there is no analysis of this.	1/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal? The RIA analyzes costs incurred as a result of adopting EHR in a way that implies that it's systemic. Practitioners and hospitals aren't doing it because costs are substantial.	1/5
Does the analysis present credible empirical support for the theory? No relevant discussion.	0/5
Does the analysis adequately assess uncertainty about the existence or size of the problem? No relevant discussion.	0/5
7. How well does the analysis assess the effectiveness of alternative approaches?	1/5
Does the analysis enumerate other alternatives to address the problem? Alternatives mentioned in the RIA section focus on different ways to define "meaningful use." The preamble also mentions that HHS has considered alternative methods of reporting electronic data, such as different reporting periods and reporting to different entities (such as distributed networks that submit summary reports to HHS). Alternatives do now play much of a role in the RIA.	2/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)? The range of alternatives is quite narrow. No consideration of other ways to promote adoption of electronic health records or achieve the anticipated outcomes.	1/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved? No relevant discussion.	0/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future? Analysis states that it is not beneficial on net for providers to adopt EHR, so subsidies are needed. For doctors, analysis develops a "baseline" that reflects adoption trends projected by studies. It is not clear if this baseline is different from the "low" forecast. For hospitals, the analysis groups them based on existing technology, so that estimated costs are incremental to what hospitals are already doing.	2/5
8. How well does the analysis assess costs and benefits?	2/5
Does the analysis identify and quantify incremental costs of all alternatives considered? The analysis appears to calculate the costs of implementation, but confusion over baseline noted above makes this unclear. The analysis explicitly notes that HHS has not found research that would allow it to quantify the incremental costs of provisions in the rule that are not required in the legislation.	2/5
Does the analysis identify all expenditures likely to arise as a result of the regulation? The analysis identifies costs to government, plus implementation and maintenance costs for providers. If there are costs to patients, such as privacy, these are not discussed.	4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services? No relevant discussion. Surely a big government subsidy to these systems might affect their price? And surely the hoped-for productivity increases might affect medical expenses in the future?	0/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation? The analysis notes that payment incentives will be weaker for providers with small Medicare billings. Some acknowledgement of possible perverse incentives ("We do not wish to see the bar for demonstration of meaningful use set so high, especially in the early years of this program that, it becomes a deterrent for broad provider participation")—but no extensive analysis.	1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis? The analysis acknowledges substantial uncertainties about costs, notes a range of estimates, and solicits comment on the likely costs of the proposed rule.	2/5
Does the analysis identify the alternative that maximizes net benefits? Ultimate benefits are not measured, so net benefits could not be calculated.	0/5
Does the analysis identify the cost-effectiveness of each alternative considered? Since the RIA estimates adoption of the technology, cost-effectiveness could be calculated for the alternative chosen, but it isn't. The analysis cites one CBO study that says EHRs can help providers supply health care more efficiently.	2/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs? The analysis notes that providers and the federal government will bear costs, and it estimates costs for each party. Costs per provider are calculated. Tables show the percentage of providers' costs that will be covered by subsidies. Regulatory flexibility analysis notes that most providers are considered small entities. No further breakdown of costs by subcategories of providers and no discussion of any costs to patients, such as risk of lost privacy, are provided.	3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits? The analysis asserts providers will receive some cost reductions or other benefits. In several places it mentions benefits for patients, providers, and society, but there is no real analysis of these.	1/5
Use
9. Does the proposed rule or the RIA present evidence that the agency used the analysis? Most of the specific provisions in the rule were generated by the legislation and/or an advisory board and a series of meetings; there were not the results of the regulatory analysis. Maximum allowable costs were based on research studies that estimate costs of EHR systems.	2/5
10. Did the agency maximize net benefits or explain why it chose another alternative? Since benefits were not calculated, net benefits were not calculated either. There is some awareness that making the requirements too onerous could discourage adoption, which suggests some awareness of net benefits even if they were not calculated. By and large, the calculated costs in th RIA appear to be an after-the-fact estimate of the effects of an approach that was chosen for other reasons.	1/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future? Proposal establishes quantitative targets for use of electronic health records that providers must meet to qualify for payments. This is not the same as establishing measures/targets for evaluating the success of the regulation. These data could have been used to establish measures and goals.	1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so? A set of tables lists "clinical quality measures" providers must be able to report electronically. Some are outcomes; many are activities. These data could be used to evaluate effects of the regulation on outcomes, but no provision is made for doing so.	1/5

Total	25 / 60

Additional details

Agency: Department of Health and Human Services
Regulatory Identification Number: 0938-AP78
Agency Name: Department of Health and Human Services
Rule Publication Date: 01/13/2010
Comment Closing Date: 03/15/2010