Building Sustainable HIE Capacity: Addressing Key Issues
Part of the 2010 State HIE Leadership Forum Webinar Series
Presented by the State Level HIE Consensus Project Under the Auspices of the ONC State HIE Program on April 15, 2010. Presentation includes examples of four revenue mechanisms with advantages and drawbacks, plus more specifics on Vermont’s experience.
Link to Webinar series presentations
http://slhie.org/forum-resources/presentations/
Building Sustainable HIE Capacity Presenatation (pdf)
Four Revenue Mechanisms
1. Subscription Fees
Description
–Participants pay fees based on a schedule (e.g., annual or monthly). Different variations are possible, including a tiered fee schedule which recognizes differing levels of participation, organization type, or organization size.
Example
–HealthBridge, acquires approximately 85 percent of its operational revenues from subscription fees charged to healthsystems using the exchange.
Advantages
–Participants can better predict their level of payment
–Statewide HIE effort can better predict its level of revenue and long term implementation strategy
–Provides a transparent and straightforward pricing structure
–Few disincentives to participate once membership fee is accepted and paid
Drawbacks
–If the number of participating organizations is limited, fees would have to be substantial to generate significant revenue
–Other than attracting new members, fees can likely increase no more than annually
–Significant lag may develop from time when expenses incurred to opportunity to raise fees and generate needed revenue
–May be less desirable in some situations–especially for those constituencies who will be both data suppliers as well as data consumers of the exchange.
2. Transaction Fees
Description
–Participants pay fees on type of service or data requested. This may include a tiered scale with volume discounts – lower fee per message delivered for higher volumes. A nominal, onetime start-up fee may also be charged.
Example
–Micro-fee for every patient lookup transaction. Typically between $0.25 or $2.00.
Advantages
–Participants pay in direct proportion to their use of the HIE
–Has the potential to generate significant revenues as volume of HIE and associated costs rise over time
Drawbacks
–Transaction fees may discourage participants from using the HIE
–May be hard for organizations to predict their evel of use and therefore budget for fees
–Challenging for Statewide HIE effort to predict its evenue
–Challenging to substantiate fee structure during stat-up phase in the absence of a “track record” of performance
–Administrative requirements for billing and ayment may be overly complex.
–HIE costs may become “lost” if embedded within larger set of charges for a hospital stay or outpatient encounter.
3. All Payer Assessments
Description
–Surcharge on healthcare claims
Example
–Since Oct. 1, 2008, each health insurer operating in Vermont paid a quarterly fee into a fund. Insurers choose between paying 0.199% of all healthcare claims paid for their Vermont members in the previous quarter, or a fee based on the insurer’s proportion of overall claims in the past year.
Advantages
–Has the potential to generate significant revenues
–Statewide HIE effort can reasonably predict its level of revenue from this source and long term implementation strategy
–Charge being borne by a broadbased constituency – all recipients of healthcare services
–Has the potential to generate significant revenues
–Statewide HIE effort can reasonably predict its level of revenue from this source and long term implementation strategy
–Charge being borne by a broadbased constituency – all recipients of healthcare services
Drawbacks
–Depending on services offered, value to payers varies significantly
–Legislative and/or economic climate may or may not support this option
–Payers may pass the fee on to patients through increased premiums if assessment is added to claims
–ERISA plans may fall out of the State’s jurisdiction
4. Performance-based Incentives
Description
–Incentives paid by insurers to physicians and health systems for achieving certain healthcare-related quality measures or milestones that depend on the use of HIE.
Example
Pay-for-performance programs and Medicare and Medicaid MU incentives.
Advantages
–Focuses on performance over process
Drawbacks
–Can be more complex to administer than alternative mechanisms
Bringing it All Together
State Experiences Developing Financing Approaches
Statewide HIE: Vermont Information Technology Leaders
HIE Services:
• Laboratory connectivity service
• Chronic disease data service
• Medication history data service
• Radiology connectivity service (Planned)
• Continuity of Care Document exchange service (Planned)
Financing Strategies:
• Began with support from a legislative appropriation and a commitment by medication history client to pay transactional fees
• The revenue model evolved when the Vermont Department of Health agreed to pay a monthly subscription fee to support the development of chronic disease data services to support its Blueprint for Health initiative
• With support from the legislature and administration the Health IT Fund was created using a 0.199 percent fee on all medical claims. When estimating the need for funding, VITL analyzed cost of operating the HIE, building /maintaining interfaces, and providing EHR implementation grants to 122 independent primary care practices. This funding greatly reduced ongoing legislative appropriations for VITL.
• Additionally, VITL received additional grant funding for HISPC and other initiatives.
Experiences from others
States with Business Plans for Statewide HIE
–Colorado, Delaware, Maine, North Carolina, Rhode Island, Utah
States with ONC approved Operational Plans
–New Mexico
States just getting started
–Others
