An e-prescription for Medicaid

An e-prescription for Medicaid Information technology could help save Medicaid, but complexity and a lack of standard practices continue to hobble the program

BY Nancy Ferris
Published on Aug. 14, 2006

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States are beginning to incorporate clinical information technology into their Medicaid systems, but the nation’s broadest health care program is by no means at the forefront of the movement to digitize medical information.

That’s the consensus of health industry observers, some of whom say the program is missing opportunities. Medicaid could help lead the nation toward a 21st-century health information environment, they say, while making a dent in two major national problems: the high cost of and lack of consistent care for uninsured Americans.

Despite much talk about the potential of electronic health records (EHRs), few examples of their use in Medicaid programs are available for study and even less is known about their impact on costs. And for every advocate who says EHRs will improve the quality of care, there is another who says the states can’t afford the care they provide now.

In a study conducted in late 2005 for the Agency for Healthcare Research and Quality (AHRQ), Avalere Health found that of 101 health information exchanges under way in 35 states, only 19 mentioned Medicaid as a stakeholder. Meanwhile, the University of Massachusetts is conducting another AHRQ-funded investigation into how Medicaid can help advance health IT.

Mike Leavitt, secretary of the Department of Health and Human Services, said he wants to reform Medicaid and the other major federal health insurance program, Medicare, so that they “are viewed as leaders in the collaborative development and use of health information technology, quality measurement and pay for performance.”

But Medicare, which insures about 42.5 million senior citizens, has gained most of the high-level attention at HHS. Medicaid insures about 55 million low-income citizens and is widely viewed as the stepchild of the Centers for Medicare and Medicaid Services (CMS), the HHS agency that operates both programs. In Leavitt’s statement in May outlining the HHS budget for the coming fiscal year for a Senate subcommittee, Medicare got five paragraphs and Medicaid only one.

Even with HHS picking up the most of the tab, escalating Medicaid costs are making headlines in most states. Total expenditures increased 7.6 percent in 2004 after an increase of 6.9 percent in 2003, according to a May report from the Kaiser Commission on Medicaid and the Uninsured. Health care now is the single largest expenditure for state governments, and some could face bankruptcy if such trends continue.

As a result, states and the federal government have been bickering over cost controls, which distracts them from making long-term improvements to the program. But even without the financial difficulties, cooperation on health IT could be difficult because of the split responsibility for Medicaid.

Advocates of more Medicaid leadership on health IT, such as former Speaker of the House Newt Gingrich, say the program is a prime candidate for expanded use of health IT because of the difficulty of coordinating care for low-income individuals. With primary care physicians increasingly in short supply in parts of the nation, Medicaid recipients often turn to hospital emergency rooms, free-standing clinics and other sources of care, especially in emergencies.

They often receive duplicate diagnostic tests and treatments, and providers have difficulty finding out what care they have received elsewhere. “There’s a fair amount of overutilization of services,” said Rick Friedman, director of state systems for CMS’ Medicaid division.

The various providers may also unknowingly prescribe medicines that interact and harm the patient. Having an EHR available to each doctor who sees a patient could improve the quality of care, health IT proponents say.

In addition, Medicaid fraud and abuse are a constant concern among legislators and auditors. “There’s at least 10 percent fraud in Medicaid,” said Sen. Tom Coburn (R-Okla.) at a recent hearing. “That’s $4 billion we don’t have.”

Coburn, who is a physician, added that he would like to see more physicians and providers go to jail for such abuses.

Another common problem involves patients who receive multiple prescriptions for painkillers and other drugs, then abuse or resell the medicines. More comprehensive recordkeeping systems would make it easier to spot such abuses. But policy experts say health IT is not a priority for Medicaid decision-makers for a variety of reasons.

First of all, Medicaid is administered by the states. They split the costs with the federal government according to a complex formula that results in the federal government paying one-half to three-quarters of the costs, depending on the state.

Each state’s program is different, said JoAnn Lamphere, state health policy manager at the Lewin Group, a Virginia consulting firm. However, most states face the same challenges of dealing with strict and arcane Medicaid rules and providing the necessary health services to the low-income people the program serves, Lamphere said.

Bruce Greenstein, vice president of health care at technology company CNSI, said that “on the state side, all too often the technology and the policy leadership are bifurcated” and reside in different government divisions. Some states also operate Medicaid systems separately from their other health programs.

In addition, most states have opted for managed care delivery systems that operate under contract to the governments. That adds another layer of complexity because those governments do not deal directly with some of the doctors and hospitals that might use health IT.

However, because the federal government pays 90 percent of the cost of buying the computer systems that process Medicaid claims, CMS has some leverage when a state applies for funds to upgrade its systems.

CMS is beginning to push the states toward a standards-based, modern IT architecture that can link data from a variety of sources, including Medicaid claims, to provide a more comprehensive picture of each patient’s health. It is called the Medicaid IT Architecture (MITA).

Like the rest of the nation’s health IT infrastructure, MITA is less than 100 percent complete. “It will take a fair amount of time,” maybe a decade, to flesh out the architecture and deploy it nationwide, said Friedman, who is responsible for MITA.

The new architecture provides ways for Medicaid to link up with a larger health IT system and incorporate clinical information, thereby giving providers a holistic view of each patient’s case, Friedman said. Systems will be modular, flexible and responsive to program changes.

Part of Friedman’s vision for MITA includes connecting to regional health information organizations (RHIOs) or other data repositories. He described state Medicaid systems as future nodes on a nationwide health information network.

Medicaid currently relies on an infrastructure in which little interoperability exists among state systems. For example, New York’s system cannot connect with Florida’s, even though a substantial number of people get services in both states. And information from systems supporting other health-related services, such as mental health and substance abuse, is usually not available to those caring for Medicaid patients.

Although some people abuse the system, lack of good information means that even well-intentioned people sometimes get unnecessary tests and treatment, Friedman said. The key to reducing such duplication is to create a complete picture of a patient’s interactions with health care providers and services such as pharmacies, he said. Such a networked clinical architecture would include doctor and nurse interactions with the patient, prescriptions, diagnoses, laboratory test results and medical procedures performed, no matter where the patient received care.

However, Lamphere is not convinced that the states will be eager to participate. Despite the hype about savings and benefits from systems that support better program management, she said, the states might not spend the money needed to provide EHRs for their Medicaid patients.

The return on investment is likely to be slow to materialize, Lamphere said, and states have become wary of the unanticipated costs that seem to pop up every time a new system is built. “The goal is a worthy one,” she said, but “it’s not the highest agenda item for state Medicaid policy.”

Friedman agreed that state Medicaid managers are skeptical about health IT. They are often preoccupied with the crisis du jour, which at midyear was the new federal requirement that Medicaid recipients prove they are U.S. citizens.

Another barrier to Medicaid involvement in health information exchanges is cultural. Program managers have a deep-seated belief that data about their clients must be kept confidential at all times. New York officials have requested a letter from CMS confirming that participation in clinical data exchanges is appropriate and legal.

Despite those barriers, some Medicaid officials are taking a longer-term view. In North Carolina, for example, more than a dozen community groups coordinate care for Medicaid patients. Although they are organizations rather than data networks, they could become the foundation for RHIOs, said Dr. Allen Dobson, assistant secretary for health policy and medical assistance at North Carolina’s Division of Medical Assistance.

One group has developed a Web-based system for managing the care of patients with chronic diseases such as asthma and hypertension and is sharing it with other communities, Dobson said. He envisions similar community-based development of other health IT systems, perhaps with financial support from the state.

“We’ll use Medicaid as a lever to try to get into the communities” and encourage them to build systems that share information for the benefit of the entire population, Dobson said. The whole point of health IT, he added, is to improve people’s health.

The Utah Health Information Network (UHIN) has operated for more than a decade, sharing claims information among doctors, hospitals, insurers such as Medicaid, laboratories, local health departments and other providers. Now the network is adding clinical information to help reduce paperwork and speed the movement of records to providers involved in coordinating patient care. The state’s Medicaid program is a founding member of UHIN.

“Right now, we’re in a transition phase” with several pilot projects under way, said Dr. David Sundwall, executive director of the Utah Department of Health.

Like their federal counterpart, state governments have been reluctant to force doctors to adopt health IT as a condition of receiving Medicaid reimbursements. In some parts of the nation, doctors are reluctant to accept Medicaid patients, and a health IT mandate could cause more of them to drop out of the program.

Yet some kind of mandate might be necessary before patients can benefit from health IT. At a federal Medicaid Commission meeting in July, members discussed recommending a Medicaid EHR mandate in their report, which is due in December.

It’s more likely, however, that policy-makers will opt for some kind of incentive program, such as paying doctors a small sum each time they use health IT in a Medicaid-funded encounter with a patient. That could help doctors justify the cost of acquiring EHR systems, but it would also drive up the program’s already high costs.

Another option is for CMS to require that state Medicaid programs participate in health information exchanges such as RHIOs as a condition of receiving federal funds. Such a requirement would demonstrate that the federal government is committed to advancing health IT.

But in the end the states are responsible for the Medicaid program, and they must take the lead, Greenstein said. As the largest single payer of health claims in every state, he said, Medicaid “ought to be in the forefront and in the driver’s seat.”