What New Research Says about Which Federal Financial Incentives Produce Health System Change

Aug. 18, 2017
A new study in Health Affairs looks at the extent to which meaningful use incentives actually spurred EHR adoption—and what the implications are for federally driven incentives for change going forward

As Healthcare Informatics Managing Editor Rajiv Leventhal reported on August 9, “Electronic health record (EHR) adoption rates in hospitals increased by an average of 3.2 percent annually in the period before implementation of meaningful use (MU) incentives. But in the period after MU, the average annual increase was 14.2 percent, according to new research in Health Affairs.” Leventhal continued, “As study authors—Julia Adler-Milstein, Ph.D., an associate professor in the School of Information and School of Public Health (health management and policy) at the University of Michigan, and Ashish K. Jha, M.D., is the K. T. Li Professor of International Health at the Harvard T. H. Chan School of Public Health in Boston—noted, the extent to which recent large increases in hospitals’ adoption of EHR systems can be attributed to the Health Information Technology for Economic and Clinical Health (HITECH) Act of 2009 is uncertain and debated.”

As Leventhal noted in his report, researchers Adler-Milstein and Jha found that, while acute-care hospitals eligible to participate in HITECH’s meaningful use program raised their annual average increases in EHR adoption rates from 3.2 percent in the pre-study period to 14.2 percent afterwards, hospitals ineligible to participate in meaningful use went from only a 0.1-percent adoption rate per year to only a 14.2-percent adoption rate. The authors did note “several important limitations to their research, including the fact that “First, ineligible hospitals are different from eligible hospitals in terms of their patient populations and the care they deliver. Therefore,” the wrote, “ineligible hospitals are not the perfect group. However, because meaningful use is a national program,” they note, “we lacked alternative comparison groups.” Additionally, they conceded that they faced some challenges around survey response; and, they wrote, “Finally, we were not able to disentangle the effect of the various  individual components of HITECH on EHR adoption. While the meaningful-use incentive program was the centerpiece of HITECH, complementary programs such as the Regional Extension Center program and the EHR certification program—alone or in combination with the meaningful-use program—could have driven an increase in EHR adoption.”

Nonetheless, the differences in EHR adoption that Drs. Adler-Milstein and Jha uncovered were significant. In terms of overall conclusions, the authors wrote, “HITECH is a unique policy intervention that offered hospitals financial incentives in the form of bonus payments to speed the rate of EHR adoption. Even though the large observed increase in EHR adoption among eligible hospitals after meaningful-use incentives were introduced is compelling evidence of HITECH’s effectiveness, it is possible that many hospitals would have adopted EHRs without the policy intervention. By using ineligible hospitals as a control group, we found that HITECH can be credited with increasing the rate of EHR adoption by 8 percentage points per year,” the wrote.

Further, the researchers wrote, “Our results raise the question of whether the annual 8-percentage-point increase attributable to HITECH is substantial and reflects good value for the $20.9 billion that was paid to hospitals through 2015 (with additional funding paid to eligible professionals) as a result of their meeting meaningful-use criteria. Given that the level of EHR adoption among eligible hospitals in 2010 was 15 percent, an increase of 8 percentage points per year suggests that in five years the incentives moved U.S. hospitals past the halfway mark. There are likely very few other policies that have driven such substantial change in such a short period,” they wrote.

Bingo. One of the things that I personally have found intellectually frustrating for the past several years has been the somewhat myopic grousing about meaningful use that left out discussion of the program’s core impact. Physicians and other clinicians, and others working in hospitals and medical groups, have had much to legitimately complain about with regard to the program. They have also had much to legitimately complain about—and still do—with regard to the limitations of EHRs, and their lack of user-friendliness. The thing is, anyone who’s been in healthcare for a long time understands that EHRs were designed at a time when something like pure storage of patient record information was the rather limited initial goal, and long before most people in healthcare, including clinicians on the ground, understood the broad direction that the healthcare system would take in the U.S.—towards accountable care, population health management, bundled payments, and value-based care and payment. The earlier versions of EHRs were closed, clunky, difficult to use, and relatively primitive—and some would say they haven’t advanced all that much since then.

All that said, had the HITECH act never been passed as part of the ARRA (the American Recovery and Reinvestment Act of 2009), the simple reality is this: we would probably still be stuck below 50-percent adoption of EHRs in acute-care hospitals. And that is very significant, because what matters now is how federal healthcare officials might be able to pull levers to incent U.S. healthcare system changes in the future. The authors wrote, “Our findings have implications for future policy efforts that seek to spur technology adoption. They suggest that financial incentives tied to technology adoption are likely to substantially speed uptake across a range of hospital types. However,” they note, “given that previous analyses of ambulatory care departments failed to find an effect of HITECH, it is not clear which mechanisms are at play… More broadly, our results raise the question of why HITECH was successful in driving change among hospitals when many other policy efforts that seek to change hospitals’ and ambulatory providers’ behavior have not succeeded. In particular, there is mixed evidence on the effectiveness of pay-for-performance programs in improving quality of care. We suspect,” the wrote, “that a primary reason is the sense of inevitability: EHR adoption was likely in many hospitals’ long-term plans, and the availability of incentives may have simply moved it up on the priority list.”

In other words, when federal healthcare officials use policy and payment levers to push the industry forward on key policy imperatives for healthcare going forward, they can achieve some level of success, when the incentives match general trends emerging in the industry to begin with.

Meanwhile, when we look at what has been accomplished by the meaningful use program under HITECH, despite its limitations and problems, it remains quite significant. Getting to 95-plus-percent EHR adoption among Medicare-participating inpatient hospitals is huge. Let’s not forget how important that watershed development has been, as we look at this moment in the evolution of U.S. healthcare—and potential future scenarios to come.

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