Louis D. Brandeis, who served on the U.S. Supreme Court from 1916 to 1939, is often quoted as describing the states as “laboratories” for policy experiments.

The best thing about state governments' willingness to experiment is that their successes can be replicated by other states. For instance, in 2007, California passed a privacy bill that extended its financial data breach notification to the healthcare realm. Now, if there is a breach of health data anywhere in the state, healthcare providers must notify patients. The law also made clear that the data breach notification rules apply to personal health record vendors such as Microsoft and Google.

“When California passed the financial data breach law a few years ago, 30 other states followed suit. So this may be the model for other states,” says Kory Mertz, research analyst for the National Conference of State Legislatures in Washington, D.C. “This is the laboratory of democracy argument.”

Mertz, who tracks health IT legislation for NCSL, notes that all the states are struggling to cope with certain common issues. “They are all grappling with how to update their privacy laws,” Mertz says. That's why California's efforts on that front, as well as the ongoing work of the federally funded Health Information Security and Privacy Collaboration, may prove valuable to many states.

Another issue is the state's role in funding health IT adoption. “Legislators don't want to subsidize people who are already adopting health IT, but they do want to find ways to help groups like rural providers and community health centers who can't afford it,” Mertz says.

Although some budget-strapped states such as Florida have had to limit health IT project funding, Mertz listed several states that have taken the lead, including Minnesota, Vermont, Rhode Island, and New York. The Empire State has put more than $200 million, far more than any other state, into funding interoperable health records and is now considering creating a process to certify RHIOs.

Minnesota has passed legislation requiring the use of e-prescribing by 2011 and EHRs by 2015. The state has updated its privacy laws and is ready to do real-time exchange of data, Mertz says. He adds that people in Minnesota credit some of its success to the fact that state law requires that all healthcare providers and insurers be nonprofit, which they say has led to a collaborative environment in the state.

Small-state success

Some states' small size has played to their advantage. Vermont, Rhode Island, and Delaware have all made progress on statewide HIE initiatives.

Perhaps the boldest step this year occurred in Vermont, where the Democratic-controlled Legislature passed, and Republican Gov. Jim Douglas signed into law a measure to impose a fee of two-tenths of 1 percent on all medical claims to fund health IT efforts. It is expected to raise $32 million over seven years to help fund EHR adoption and HIE development.

“I think it's a really important accomplishment, and it's the culmination of several years worth of work across political boundaries,” says Vermont Rep. Steve Maier, a Democrat who chairs the House Health Care Committee. “There's an understanding in Vermont, an agreement about the importance of health reform, and that investment in health IT is an important component of it,” Maier adds. “We know we have to make these upfront investments to get to savings and improved care downstream, and it has been a challenge to find a sustainable funding source.”

Rhode Island's statewide HIE

In June, the state enacted the “Rhode Island Health Information Exchange Act of 2008,” which lays the policy groundwork for the state HIE. As in Vermont, Rhode Island's Democratic legislative leaders have found common ground on health IT with a Republican governor, Don Carcieri.

The general assembly was concerned about privacy protections for patients, so the bill makes clear that the HIE is voluntary for both patients and doctors, explains Democratic Senate Majority Leader Teresa Paiva-Weed, one of the bill's sponsors. “It also sets up an independent advisory commission to monitor implementation of how this data is being used.”

Although it has taken great strides on the policy front, Rhode Island hasn't made as much progress on the business case for sustainable funding. It has received federal grant funding, so establishing local funding hasn't been absolutely necessary yet. “The timing has to be right,” Adams notes. “We just went through an excruciating legislative session where children had to be cut from insurance rolls. If we had tried to introduce something with a big price tag, it would have met significant pushback from all quarters.”

Paiva-Weed says she hopes that once the HIE is up and running, it will be easier for those in the healthcare community and legislators to see its value and consider funding alternatives.

Massachusetts funds expansion

The Commonwealth of Massachusetts has been working on health IT for more than a decade. It leads the nation in e-prescribing adoption, and organizations such as the Massachusetts Technology Collaborative and the Massachusetts Health Data Consortium have promoted the inter-organizational exchange of healthcare data. But the Bay State is not resting on its laurels. Recently, Democratic Gov. Deval Patrick signed into law a healthcare bill that provides $25 million to establish an institute to award grants to physicians and hospitals seeking to increase their use of health IT.In addition, the new law requires hospitals and community health centers to adopt computerized physician order-entry systems by 2012, and EHR systems by 2015.

“We've been able to do pilot projects, for instance with CPOE, that make the business case and show real savings,” says Democratic Sen. Richard Moore, chair of the Massachusetts Senate Health Care Financing Committee. “We know we can't just dump technology on hospitals and physicians and expect results. We have to provide grant funds to help with the redesign of practices.”

Moore says if the whole state adopted EHRs, there would be significant improvements in quality and cost containment. “From a public health standpoint, we'll also be better able to track how well we are doing system-wide.”

Helping state leaders share

Moore is involved with several national organizations working to make sure states can share best practices, including NCSL's Project Health Information Technology Champions — or Hitch (http://www.ncsl.org/programs/health/forum/hitch/), a public-private partnership to educate legislators on the new complexities of health IT. Besides bringing interested legislators together for regular meetings, Project Hitch also tracks legislation and executive orders and makes summaries available in a searchable database.

The National Governors Association's State Alliance for e-Health (http://www.nga.org) was created as a state counterpoint to the federal American Health Information Community (AHIC) to involve governors, legislators, insurance commissioners and public health officials. Its task forces work on issues such as how state Medicaid programs can get involved in HIEs and how states' regulatory environments can promote the use of telemedicine.

American Health Information Management Association's State Level Health Information Exchange Consensus Project (http://www.staterhio.org) was launched in 2006 to bring together the people running HIEs. Project director Lynn Dierker says the group has 13 states in its steering committee, and is in the process of creating a leadership forum from all 50 states, whose members will be able to use an interactive Web site to share ideas and work on legislation.

One thing most states agree on is that the HIE needs to be a public-private partnership not based within a state agency, Dierker says. “The state-level HIE is really a mix between public and private,” she says. “You can't split them. The data sharing covers so many sectors, and the coordination and convening are not done best by government, which is encumbered by political and budgetary shifts.”

Several state health IT leaders mentioned that the recent strategic plan released by the Office of the National Coordinator for Health IT provides a clearer vision and helps place what the states do in a larger context. But Rhode Island's Adams still believes that the way federal funds are distributed has hampered states' progress. “We get a sprinkling of funding here and there,” she says. “I liken it to making toast. One place gets funding for how to put bread in the toaster; another state gets funds for plugging the toaster in; another for pushing the lever down. And we all come to the conclusion there's no way to make toast,” she says. “We need enough funding consolidated in one place to create an example for us of how that toast is made.”