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The healthcare ecosystem is “awash in data.” It is one of the most data-intensive sectors in the US economy, with more information generated with each patient encounter. Such encounters mushroomed following enactment of Medicare and Medicaid in 1965, spurring payer and provider efforts to get their arms around the costs and utilization patterns of these patient populations. Hospitals and physician offices adopted desktop computers and information software to bill insurers. Hospitals also began to apply healthcare information technology (HCIT) to specialized areas like pharmacy, radiology, and clinical laboratories to gather and analyze clinical information. The enactment of the Inpatient Prospective Payment System (IPPS) in 1983 increased the need for HCIT to manage costs under budgeted payments. During the 1990s, changes in physician payment under Medicare and pressures from managed care payers likewise required physician practices to more widely implement software systems to manage their practice finances.

Capturing this information has been challenging. As noted in Figure 3-12, there are 2 major flows in the healthcare ecosystem: money and products. The first includes the flow of reimbursement; the second concerns the flow of products through the supply chain. Conspicuous in its absence from Figure 3-12 is the flow of information. This has long been regarded as the “Achilles heel” of the healthcare ecosystem that undermines the efficiency of the other flows. For example, pay-for-performance (P4P) and value-based purchasing (VBP) programs used by insurers rely on the electronic collection and transmittal of clinical data (and then their utilization by providers).

Not surprisingly, correcting the problem of information flow has been central to US healthcare policy for nearly 2 decades. To wit:

  • In 2004, President Bush created the position of the “National Coordinator” to lead the Office of the National Coordinator (ONC) for Health Information Technology whose responsibilities included ensuring that every American had access to his or her electronic health information and establishing connectivity of health information technology.

  • In 2009, the American Recovery and Reinvestment Act (ARRA) implemented the Health Information Technology for Economic and Clinical Health (HITECH) Act (passed in 2008), which spent $36 billion to incentivize physicians (up to $64,000 in subsidies) to adopt electronic medical records (EMRs) and demonstrate “meaningful use” (MU) of the technology—or penalize them financially if they did not do so.1 HITECH foresaw three MU stages in the evolution of the EMR, spanning from (1) data capture and sharing to (2) transmission and exchange of clinical information to (3) clinical decision support and access to all relevant data. HITECH also included funding of health information exchanges (HIEs) to grease the flow of information across provider organizations.

  • In 2015, the Medicare Access and CHIP Reauthorization Act (MACRA) shuttered the meaningful use program and shifted incentives to P4P and VBP models. MACRA also signaled the government would move away from standard regulations of EMR use, and focus instead on use of certified EMR technology and ...

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