Sustainable Funding Models for RHIOs Get Connected Knowledge Forum June 28, 2005 manatt manatt | phelps | phillips William S. Bernstein, Esq. wbernstein@manatt.com (212) 830-7282

Table of Contents Realities RHIOs: Emerging Policy Issues RHIOs: Emerging Business Plans Emerging Models for Advancing HIT/HIE RHIOs: Financing, Formation and Governance RHIOs: Lessons From The Field

Realities Framework for Strategic Action Issued but Federal Agenda Still Emerging NHIN: Waiting to hear federal response to submissions RHIOs: Still nascent concept with great variation as to mission, goals and technology plans “If you have seen one RHIO, you have seen one RHIO” Funding Sources are Scarce, Especially for Early Development Stage, But Some Notable Exceptions Big Question: Whether Potential Benefits of HIT/HIE Can Overcome Competing Agendas and Priorities

RHIOs: Emerging Policy Issues No Federal guidelines at this point, but likely to emerge in the next several months; field will evolve over time Federal definition of RHIOs like to focus on four areas Public Trust “Harmonization” of State/Local Privacy Issues Security Aligned Financial Incentives

RHIOs: Emerging Policy Issues Key issues to be defined with respect to RHIOs: Geographic coverage Requirements regarding numbers of stakeholders/definition of “community” project Relationship to National Health Information Network (“NHIN”) Tax status of an entity Availability of Federal funding Certification/Accreditation Requirements in Federal Contracts State role in defining RHIOs

RHIOs: Emerging Business Plans Regional Health Information Organization RHIOs are regional entities which support the development, implementation and application of secure health information exchange Financing Regulatory Decisions Information Technology Clinical Process Improvement Incentives Public Relations Consumer Participation Privacy and security standards Operating standards Core data set Clinical protocols Data use rules Capital Development Operations Security Training Support NHIN Compliance Clinical Guidelines Operations Implement Training Support Performance goals Incentive structure Coordination of payers and employers Marketing Strategy Communication Plan Website management Media management Performance publication Patient advocacy Patient involvement strategies Potential Outsource Partners exist Source: HealthAlliant

RHIOs: Emerging Business Plans CareSpark (Tennessee) Indiana Massachusetts

What Is CareSpark? CareSpark is a not for profit organization commit committed to better health in the central Appalachian region through collaboration, innovation, and wise use of health information 10 year history of health improvement projects Regional leaders concluded major improvements require regional health information exchange (HIE) 2 ½ years on current project; $600,000 raised in 9 months Filed for 501c3 not for profit status In our region, we are ahead of most in our willingness to collaborate. The coalition which was formed at KAHIP (Kingsport Area Health Improvement Project) in 1991 resulted in several successful health improvement projects, including Friends in Need Health Center and a project to improve drivers education and highway safety. In 1999, the group reflected its move to a more regional perspective by changing to become the Community Health Improvement Partnership, then the Central Appalachian Health Improvement Partnership. The effort to establish a process for exchanging health information began in December 2002, when the group realized that a quality improvement process for chronic disease management required good data for our region. After a demonstration of the system in use with the V.A., the group discovered a similar effort in Santa Barbara California, and resolved to pursue planning for a health information exchange for our region.

Indiana Health Information Exchange Data access and use Data management Results delivery Secure document transfer Shared EMR Credentialing Eligibility checking Hospitals Payers Hospital Results delivery Secure document transfer Shared EMR CPOE Credentialing Eligibility checking Physicians Health Information Exchange Labs Labs Results delivery Data repository Network applications Surveillance Reportable conditions Results delivery Outpatient RX Public health Payer Secure document transfer Payer Physician office De-identified, longitudinal clinical data Ambulatory centers Public health Researchers Source: IHIE

Massachusetts: Pilot Project in 3 Communities Management & coordination Joint oversight and decision-making bodies Structure, composition, process ICCC PSC Evaluation/ transformation Quality Cost Productivity Etc. Quality measurement Pilot evaluation Transformation models Intra-community connectivity Connectivity Clinical access to data Data gathering and aggregation Communication Clinical IT implementation/ support Hardware/software Implementation/tech support Systems integration Workflow redesign Decision support Source: MAeHC

Emerging Models for Advancing HIT/HIE Grassroots: No Statewide, Coordinated Effort; Driven entirely at local level – truly “allow a thousand flowers bloom” Convener: Essential Tasks: Educator, Convener, Information Clearinghouse, Researcher Catalyst: Essential Tasks: Facilitate financing, provide technical assistance and project development support to spawn regional initiatives Operator: Essential Tasks: Create financing vehicle and build infrastructure for information exchange

RHIOs: Financing, Formation and Governance Reviewing legal options necessitates a multi-faceted process involving an analysis of: The key business decisions that first need to be made in order to define the organization’s mission and scope The range of options facing the organization relative to: Governance Structure Tax Status of Legal Entity Terms and Conditions of Participant Agreements

RHIOs: Financing, Formation and Governance Medical Knowledge 100% Treatment 50% of Cost 20% of Return Diagnostic 3 applications 4 ways to eliminate waste Broad-based Decision Support Tools EHR + CDS provide Patient Data Like many things in life, it is the foundation And allows creation of patient access, portability, telemedicine And allows creation of public health surveillance, clinical research Redundancy Patient Data Errors EMR HIE CDS Source: SBCCDE, CITL, Gordian Project analysis

RHIOs: Financing, Formation and Governance Private Payers Medicare Medicaid Self-insured Self-pay Physicians Substantial savings arise from cost avoidance Formulary compliance/generic substitution Radiology Laboratory ADE Ambulatory Computer-based Physician Order Entry Source: Center for Information Technology Leadership, 2003

RHIOs: Financing, Formation and Governance Purchasers Physicians Enrollment Fee CareSpark Gain Sharing Technology Purchaser Savings Source: HealthAlliant

RHIOs: Financing, Formation and Governance Classes of Membership -- Categories of interested participants (e.g., institutional providers, physicians and medical groups, other clinicians, managed care companies and insurers, local employers, public health agencies, public representatives) could be divided into “classes” and represented on the governing body by one or more representative members. Restrictive Membership -- The governing body could consist of a limited number of members of diverse backgrounds chosen because of their leadership skills and standing in the community, their ability to articulate the views of various constituencies yet rise above those interests in determining the future of the project, etc.

RHIOs: Financing, Formation and Governance Virtual Model Non-Profit Corporation Model For-Profit Corporation Model Limited Liability Company Model

RHIOs: Lessons from the Field Importance of Leadership and Creating Shared Vision Among Key Stakeholders Organization of Project - Needs to be interdisciplinary and inclusive Clinical Legal/Organization Financial Technology Communications First step is creating strategic business plan: this will drive all future steps Structure of organizational vehicle may minimize legal complexity - multi-stakeholder not-for-profit structure, with independent decision making body, will significantly reduce concerns regarding fraud and abuse and antitrust

RHIOs: Lessons from the Field State law privacy issues may present larger hurdles to project than HIPAA Largest and most complex issues involve: Defining role of RHIO as compared to and in relation to role of stakeholders contracting with the RHIO Creating financing plan for the project; Think of financing as occurring in three stages: Planning Development Operations Note RHIO may enable financing of certain information technology investment by outside entities; this capital/operating cost will be borne by the outside entities, not the RHIO itself.