CLEVELAND, OHIO – In Dr. Sandra Berglund’s well-stocked waiting room, there’s a box of children’s toys and picture books and, on either side of a magazine rack, framed photographs of sacred places: the stadiums of the Cleveland Browns and Cleveland Indians. And in clear view behind the receptionist’s desk is something the Obama Administration will actually pay her to clear out: folders of paper medical records stuffed into shelves from the floor almost to the ceiling.

The administration is offering what sounds like a pretty good deal. If Berglund, a family medicine doctor in her own practice, transfers the information in those folders to an electronic health record system run on a computer, she could earn a $44,000 bonus over the next five years tacked on to the payments she gets for treating patients in Medicare. Or, if she cares for a certain number of low-income Medicaid patients, she could earn as much as an extra $63,750 over six years.

The doctors still have to buy the system – which can cost roughly $20,000 per physician initially – but the bonus payments are designed to get them interested. The payments are part of a $27 billion incentive program included in the 2009 economic stimulus law. The program also offers health care providers free technical support from new regional extension centers, a certification process to highlight suitable electronic systems, workforce training and a national health information exchange network, among other benefits.

The goal is to bring the last outposts of the nation’s health care system into the computer age, linking medical providers so that they can coordinate and improve patient care and – in the process-reduce unnecessary health care spending. But convincing everyone to use electronic health records has not been easy.

The government isn’t forcing doctors and other providers to make the switch. But if they don’t, Medicare will begin deducting 1 percent of their payments in 2015. The penalty rises each year to a maximum of 5 percent in 2019.

Those who don’t sign up “are in danger of being left behind and that would be bad for them and bad for their patients,” said Dr. David Blumenthal, who until recently coordinated the government’s electronic health record initiative.

And yet, neither reward nor punishment has persuaded some small practice doctors like Berglund to dump all those folders or upgrade their obsolete computer systems – a troubling omen for the Obama administration, which believes that conversion of paper records to electronic form is a crucial step toward health care reform.

Berglund is not sure she’ll even get that bonus federal officials are offering; not much of the $27 billion has been spent yet – the program has only just started – and it could become a tempting target as Congress struggles to tighten the federal budget. (In May, Medicare officials distributed $75 million in the first round of bonus payments to physicians and hospitals nationwide. Another $114.5 million in Medicaid bonuses has been distributed to health care providers through May 31.)  

She’s also not sure a big hospital like the Cleveland Clinic, a few miles away from her Middleburg Heights office, will be able “to talk to me and my little system.” She questions whether there will be hidden costs for upgrades and other things. She wonders if her staff of two will be able to learn to operate an electronic health records system. And she doesn’t think the right system is out there.

“I don’t want to be stuck with something that seems easy but isn’t going to work as time goes on,” said Berglund. She was sitting in one of her three exam rooms, after a grueling day that began just before sunrise with visits to patients in the hospital. She’ll end her day with another hospital run. She cares for about 350 patients a month. “I feel like I’m a part of their family and they’re a part of mine.”

So far, about 81,000 physicians in hospitals, clinics and private offices have registered with regional extension centers for technical help to apply for the bonuses, according to the Office of the National Coordinator for Health Information, which runs the program in the Department of Health and Human Services. Of those, nearly 31,000 work in small group practices.

The available statistics seem to indicate that the percentage of those who have signed up is modest, although there’s much uncertainty about the numbers, said Brian Bruen, a research scientist at George Washington University School of Public Health and Health Services. Even the most optimistic estimates show that the Office of the National Coordinator has a good deal of work ahead.

And there’s little doubt that doctors in small group practices play an important role in making the electronic records initiative a success. “We know that 75 percent of visits to doctors occur in practices of fewer than five physicians,” said Blumenthal. “The public has a lot to gain from our contacting these small practices.”

A logical candidate?

Unlike some hold-outs, Berglund, 58, a former math teacher, isn’t intimidated by computers or reflexively opposed to investing in a new office system as she approaches retirement. She already uses a basic computer system for sending out bills, scheduling appointments and sending prescriptions electronically. She appears to be exactly the kind of health care professional who could benefit from modernizing her practice. What would it take to persuade her?

“I wish there was one system for the entire country,” she said. “I’m praying that somebody comes up with the easiest one and makes it available for everybody – and at a relatively good price – so we can all survive, talk to each other, share information and live happily ever after.”

“I know that I’m living in a dream world,” she said.

It doesn’t help that 570 different electronic health systems certified by private organizations for non-hospital settings may be used to qualify for the bonus. In Ohio, the regional extension centers have narrowed down the choices to five “preferred” vendors: Allscripts, Sage, e-MDs, EClinicalWorks, and NextGen Healthcare. But Berglund hasn’t yet contacted the regional extension center in Cleveland whose consultants can help to figure out which product is best for her small office and how to apply for her bonus.

The decision to purchase one of these systems is complicated because they do much more than picture a paper record on a computer screen. They handle more than a thousand details, including a patient’s medical history, current diagnoses and prescriptions. They also have the kind of interactive “real time” features that work almost like computer games: when certain information is entered, the computer talks back with questions, alerts (such as an abnormal lab result), reminders, new screens, or choices that demand a response. Before a prescription can be sent electronically to a pharmacy’s computer, warnings about side effects or adverse drug interactions can pop up.

The systems can vary in appearance, content, organization and special features. Some can be customized by users in different ways, at no cost or some cost, or not at all. Some are compatible with other systems now, eventually or, some critics say, maybe never.

After purchasing the computer program, doctors will have to prove they can use it to perform more than a dozen tasks – like sending prescriptions electronically to pharmacies – in order to earn their bonus.

The costs of the systems remain daunting, despite the bonuses, particularly in areas that have been hit hard by an ailing economy. The pricetag varies widely depending on the type and size of the medical practice, whether new computers are purchased and the extent of customization, among other things. Software alone can cost from $2,000 to $10,000 per doctor. All told, the cost jumps to about roughly $20,000 per doctor, according to a regional extension center consultant who advises physicians in northeast Ohio. On top of that, manufacturers charge hefty annual fees for technical support and periodic upgrades that together can amount to about 35 percent of the upfront costs.

The systems are priced in a way that does not make comparison shopping “easy or necessarily valid,” said Dottie Howe, a spokeswoman for the Ohio regional extension center. There is no basic price because each company offers different components, features, options, and level of technical support.

“To invest money in electronic medical records is taking money directly out of our paychecks,” said Dr. Gary Plant, 36, one of five family medicine physicians at Madras Medical Group in the central Oregon town of Madras, home to about 6,000 people. The practice sees 400 to 500 patients a week. As unemployment rose and the number of insured people dropped, Plant’s income shrunk by 30 percent. This isn’t a good time to be spending more money.

“The last quote we got was $100,000 the first year and $40,000 to $50,000 per year after that,” said Plant. Because of a quirk in how doctors in rural Oregon are paid by Medicare, they won’t qualify for the bonus payments under that program. They may be eligible as Medicaid providers for the electronic health record bonus if at least 30 percent of their patients receive Medicaid. Their portion of Medicaid patients hovers around 26 to 30 percent. After several months, they were still waiting to find out from the state regional extension center if they qualify. At this point, the Medicaid bonus of up to $63,750 per doctor will be the deciding factor in whether doctors switch to electronic records.

“That’s the only way we could afford it in the next two or three years,” he said.

Despite his financial worries, Plant doesn’t need convincing about the merits of the new technology. Electronic records would let him generate a list every month of patients at risk for diabetes who need blood sugar levels checked. The list would also identify patients whose levels remain high despite medication and that trigger further follow-up. An electronic health record system could generate the list in five minutes. There’s really no other way to do it.

“Someone on my staff going through 200 paper charts would take hours and hours,” he said.

An electronic system would provide “information at your fingertips” Plant said. Today, when one of his patients ends up in the emergency room without a list of their medications, Plant has to go to his office – which luckily is across the street from the hospital – and look up the medications in the patient’s chart.

“Hopefully the chart is on the shelf where it’s supposed to be but if it is in the refill stack waiting for a prescription refill or in a pile of lab work, I may or may not be able to find it.” Even if he finds the chart easily, by time he gets back to the hospital, Plant said “I’ve wasted 20 minutes getting that medicine list.”

With an electronic health record accessible over the Internet, Plant could pull up the patient’s medication list, lab tests and other information on his smartphone, without leaving the hospital.

“Model T Ford”

The questions many skeptical doctors are asking confronted three consultants from the regional extension center at Cleveland’s Case Western Reserve University School of Medicine in April when they visited Southwest Family Physicians of Middleburg Heights, an 8-doctor group practice just down the road from Berglund’s office. The practice sees about 3,600 patients monthly and rents space inside Southwest General Health Center, a partner of the sprawling University Hospitals system.

The Case Western medical school received a federal grant of $8 million a year ago to run the regional extension center and is almost two-thirds of the way toward its goal of assisting 1,765 physicians in a five-county area. The 62 regional extension centers nationwide are an integral part of the whole initiative. The consultants who work there get training from the state regional extension center, both in person and in online classes, said Sandy Rosenbluth, who began working with the center at Case Western Reserve University last December. He co-owned an electronic health record company and also worked for a health plan owned by one of Cleveland’s hospital systems.

The consultants do not have exclusive contracts and can have other clients. Their work for the center “is preparing them for future business opportunities as well,” the center’s director, Joe Peter, said in an e-mail. The consultants are supposed to provide help anywhere from 6 to 18 months; their services end when providers have applied for their bonus. The regional extension centers received $721 million in federal grants funding intended to keep them operating for four years.

The centers assess the needs of a medical practice and then survey the manufacturers to find the best systems, said Rosenbluth. They do not recommend specific manufacturers or products, he said, though Ohio’s state regional extension center has “pre-negotiated” contracts with five preferred electronic health record manufacturers. The consultants also help assess the cost of transferring data from an old system to a new system. After the two-to-three months needed to select the system, the consultants help the doctors learn how to use it.

“What you don’t want are surprises at the end of the road,” Rosenbluth told the doctors at Southwest Family Physicians.

But surprises are exactly what the Southwest Family Physicians group is worried about during a meeting in a break room where the consultants chatted with two doctors from the group practice, the business manager and some support staff. Past experience gives the group good reason to be skeptical. They bought an electronic health record system five years ago that is now nearly obsolete. The manufacturer was taken over by another company that provides minimal technical support, according Dr. Conrad Lindes.

“The salesman said ‘you’re buying a Cadillac, this is going to be the greatest thing,’ ” his colleague, Dr. Ghassan Abdallah, recalled. But that system can’t display an X-Ray image or send a prescription electronically to a pharmacy. “We’ve got the Model T Ford,” he said.

Lindes would like a new system that can produce a list of his patients, so that he can know, for example, who has high blood pressure.

“We don’t want to wait until people have strokes to find out they have high blood pressure,” he said. But not all patients who should come in for checkups actually do. “I don’t have an easy way of contacting them and saying, ‘You haven’t been in; I’m worried about you.’ “

“Paying, and paying again”

But Abdallah’s enthusiasm for the concept is tempered by his concerns about buying another Model T Ford system, with extra costs, including monthly maintenance fees or upgrade fees. Most manufacturers will also charge the doctors to move the information in their current system to the new one. There could be extra charges to connect to other systems too. Abdallah’s technical staff said that connecting directly to the larger Southwest General Health Center record system could cost as much as $125 per doctor per month.

Following the meeting, the regional extension center consultants provided an average cost estimate that the eight doctors in the practice are still mulling over: $256,000 for “upfront expense for software, hardware and implementation services,” and $52,000 for “annual practice expense for support and other subscription fees.”

The consultants also estimated that the physicians would have to see 40 percent fewer patients during the “learning curve” period of about 20 days while a system was installed. That would generate a loss of about $125,856.

“These are significant costs,” said Lindes. “Whether we will recoup them is a big question at this point.” Lindes, 62, who joined the Southwest physicians group 27 years ago, recalled that when their first records system was installed, it took everyone nearly three months to learn to use it. During that time, the group cut the number of patient visits by half.

Lindes is also concerned that customizing an electronic medical record system will pose challenges. “You have literally a thousand data items,” he said, including date of birth, first name, last name, gender, and health statistics that can change over time like blood pressure. “Each system has its own proprietary ways of keeping that data.”

But there are other arguments for going forward – theoretically, at least. During the meeting, Rosenbluth, the consultant, said the government has set requirements for “inter-changeability” that so old data can be integrated into new electronic health record systems. He told the group that a federally required “health information exchange,” a kind of information “hub,” will be established so health care providers can talk to each other. And he said those “pre-negotiated” contracts with five preferred electronic health record manufacturers could be used to minimize future costs.

The five companies selected as Ohio’s preferred vendors – Allscripts, eClinicalWorks, e-MDs, NextGen Healthcare and Sage – were chosen from among more than 40 by a committee of 18 health care providers. The companies have agreed to charge prices “as good as or better than” prices offered to other regional extension centers, to provide onsite assistance when a practice turns on its electronic health record system for the first time, offer technical support for at least six years, and limit annual cost increases for continuing technical support, among other things.

Whether the five preferred vendors offer a better deal than their non-preferred competitors is not known because the state regional extension center doesn’t have pricing information from non-preferred vendors, said Howe, the spokeswoman for the state’s regional extension center. Pricing from the preferred vendors are confidential, she said. And despite their preferred status, the five companies do not guarantee that eligible health care providers who purchase their systems will receive the government’s bonus payments.

With so many choices out there, the doctors wanted some reassurance. They asked if there exists a proven medical record system that can handle vast amounts of data. The consultants said the Veterans Administration has been using one for years.

“I’m not a proponent of big government,” said Abdallah. “But why aren’t they rolling that out across the country and force feeding it to us? Can we buy it?”

“No, you can get it for free,” said Gary Showalter, another consultant. But it doesn’t send out bills to patients or insurance companies and can’t be combined with a separate billing program.

Abdallah then wondered if it might be better to “limp along with the system I have” and wait until the better systems work out the kinks and emerge from a competitive market. “Why don’t I sit tight instead of paying, and paying again?” he asked the consultants.

“Do we have to do it this year?”

There’s a catch

The short answer is no, but there are advantages to making the switch sooner than later, said Rosenbluth. You’ll need the time.

Because there’s a catch.

Health care providers have to do more than just own an electronic health record system in order to earn a bonus payment – they have to use it. Doctors treating Medicare patients have to meet 20 out of 25 criteria for what health officials call “meaningful use,” demonstrating that they are using the system to perform required tasks, like sending a certain percentage of prescriptions electronically to a pharmacy. Hospitals have to meet 19 criteria out of 24. Those are only “stage one” of the meaningful use requirements that must be met to receive the first portion of the bonus. Criteria for “stage two” are expected to be developed by 2013 and another set for “stage three” will not be ready until 2015.

In order to receive the maximum bonus payments, doctors have to meet all three sets of criteria, starting with stage one. If they begin this year or next, they can earn the maximum bonus of $44,000 by 2016. If they apply for the bonus in 2013, the maximum bonus is $39,000. The last year to apply is 2014, when the bonus is reduced to 24,000.

The bonus amounts are based on 75 percent of what a doctor bills Medicare; to receive the bonus, the provider must first submit at least $24,000 in claims. The maximum bonus payment for 2011 is $18,000.

Trying to meet the criteria is so complicated that seven health care associations, including the American Medical Association and American Hospital Association, have asked federal officials to resolve the current problems before stage 2 begins. The groups want an 18-month delay. In a 35-page letter in June, the groups said information about the bonus requirements is still “hard to find and may be difficult to understand.” They said it’s not clear whether a health care provider can use components of an electronic records system or must buy the manufacturer’s complete system. They also complained that there is an appeals process for providers who apply for the Medicaid bonus and are denied, but there is as yet no way to appeal a Medicare bonus denial.

Medicare officials began distributing the first installment of bonuses in late May. To earn a bonus this year providers have to submit a form saying that they have used their electronic health record system to meet the stage one criteria during 90 consecutive days. They must use their system to, for example:

–          Record the sex, race, birth date and other demographic information for at least 50 percent of patients.

–          Record vital signs (height, weight, blood pressure, for 50 percent of patients two years and older

–          Maintain a current medication list for 80 percent of patients

–          Send 40 percent of prescriptions electronically

–          For 50 percent of office visits, provide patients with summaries within 3 business days, including any follow-up tests and future appointments

–          Provide summaries of quality of care indicators, such as blood pressure levels and adult patients’ weight.

The Medicaid bonus payment is calculated differently. To qualify for the maximum $63,750 bonus in that program (paid over six years), 30 percent of a doctor’s patients must have Medicaid (or 20 percent for pediatricians). That requirement will disqualify some doctors, unless Congress drops it, said researcher Brian Bruen. But that is unlikely to happen, he says.

Although the Medicaid bonus program is operating in 17 states and territories, it won’t kick off until July or later in another 39, including 8 that have no launch dates. That’s because it is run by the states, unlike its Medicare counterpart, which is federally administered.

The meaningful use requirements may seem cumbersome for doctors. However, simply encouraging them to obtain electronic health records – absent requirements for using them – is “insufficient,” said Blumenthal.

Perhaps. But the reporting requirements coupled with the prospective expenses are among the reasons Henry Bloom, 64, a family medicine doctor with a solo practice on Cleveland’s East Side, hesitates to switch from paper to electronic records. The bonus isn’t appealing because “you have to jump through innumerable hoops,” he said. And he asserts that the investment of his time and money required outweighs the government’s reimbursement. “It’s going to cost everything the government will give you,” he said.

Or more, some claim. When a group of respected researchers studied how 26 primary care practices in Texas adopted a web-based electronic health record system, they found that it cost an average of $233,297 – including maintenance costs – for a five-physician practice for the first year – or about $46,659 each — and required an average of 134 hours to learn to use it.

Blumenthal has cited other studies showing that doctors using electronic records have higher revenue than those who don’t. They can come out ahead financially because, for example, an electronic system can ensure more accurate billing and increases efficiency.

The government’s ultimate goal is to use electronic systems to ensure better, coordinated care for patients, according to Blumenthal’s successor, Dr. Farzad Mostashari. As an assistant commissioner at the New York City Department of Health and Mental Hygiene, Mostashari headed the New York City Primary Care Improvement Project, which received $59 million from local, state, federal and private sources. Eligible providers receive a free electronic system from eClinicalWorks, including two years of technical support. More than 2,500 providers participate in the project, including 34 community health clinics. Providers who use their systems to track and control their patients’ risk of cardiovascular disease can earn $20,000 bonuses. A federal study published last fall found that providers were able to use electronic health records to reduce preventable deaths. Something as simple as electronic reminders prompted doctors to screen patients for diabetes, high blood pressure and cancer, and increased the number of patients who were successfully controlling their cholesterol and blood pressure.

Mostashari declined to be interviewed for this story. But he told a think tank gathering in Washington in April that “you can’t improve what you can’t measure – you can’t even see it.”

An early stage

For some doctors in small group practices, though, the decision to use electronic health records continues to be a difficult one – despite bonuses and the prospect of financial penalties.

Administration officials agree with doctors like Abdallah and Berglund who are waiting for the best electronic systems to emerge from the crowd.

“They are in an early stage of development,” Blumenthal said, before resigning “They are sort of where PCs were 10 to 15 years ago and they will get better once there is a robust, competitive market.”

Abdallah, though, wants someone else to work out to work out the kinks in the system. Berglund agrees.

“I don’t have enough time,” she said. “I have to take care of patients.”

Blumenthal counters that there’s a reason for the government’s hands-off approach.

“We don’t want to heavily regulate this market,” said Blumenthal. “We want it to be a market that offers choice and where people can find the technology that’s best for them.”

But Lindes is worried bonus payments will thwart a competitive market.

“This money that the federal government is waiving in front of everyone’s faces perverts the free market,” he said. “The vendors aren’t coming to me and saying let’s develop a product that suits you and will help you practice better. They are developing a product for whomever in Washington who wrote the specs.

And those criteria are still evolving. Last year, federal officials approved six private companies that can certify whether systems “have the capabilities necessary to support [providers’] efforts to meet the goals and objectives of meaningful use [requirements],” a government website explains. Only a certified system can be used to meet the criteria for bonus payments, and yet the second and third stages of the certification criteria have not been finalized.

But certification is not the government’s seal of approval or a guarantee that those systems can be used reliably, regardless of their “capabilities.” The Office of the National Coordinator is working with the National Institute of Standards and Technology to develop “useability tests” that Blumenthal said will put pressure on manufacturers to improve their electronic health record products. In June the institute released an initial draft of a protocol for objectively testing electronic health records but the certification companies will be not be required to follow it, a spokeswoman for the coodinator’s office said.

Complicated? It can sometimes come across that way in the suburbs of Cleveland. Toward the end of the meeting with the regional extension center consultants, Abdallah shot a question across the table at his partner, Lindes, who has been fascinated with computers since the earliest PCs.

“Conrad, are you convinced we need another EHR right now?”

Lindes paused for a moment. “I think it would be very foolish to go backwards.”

The doctors have now registered with the regional extension center, and are shopping for a new electronic records system. And ultimately, the decision is theirs alone – whether it brings rewards from Washington, or penalties.

jaffe.khn@gmail.com

iWatch News is the website of the Center for Public Integrity, a nonprofit group focused on investigative journalism.

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