# Presentation: 778589

## Regional Health Information Organizations:  Business, Organizational and Legal Issues

- manatt
- manatt | phelps | phillips

*AHRQ Annual Meeting*
*June 9, 2005**** ***

**William S. Bernstein, Esq.**
**wbernstein@manatt.com**
**(212) 830-7282**

## Table of Contents 

***Realities***
***RHIOs: Emerging Policy Issues***
***RHIOs: Emerging Business Plans***
***Emerging Models for Advancing HIT/HIE ***
***RHIOs: Financing, Formation and Governance***
***RHIOs: Lessons From The Field***

## Realities 

*Framework for Strategic Action Issued but Federal Agenda Still Emerging*
- NHIN: Waiting to hear federal response to submissions
- RHIOs: Still nascent concept with great variation as to mission, goals and technology plans
- “If you have seen one RHIO, you have seen one RHIO”
*Funding Sources are Scarce, Especially for Early Development Stage, But Some Notable Exceptions*
*Big Question: Whether Potential Benefits of HIT/HIE Can Overcome Competing Agendas and Priorities*

## RHIOs:  Emerging Policy Issues

*No Federal guidelines at this point, but likely to emerge in the next several months; field will evolve over time*
*Federal definition of RHIOs like to focus on four areas*
- Public Trust
- “Harmonization” of State/Local Privacy Issues
- Security
- Aligned Financial Incentives

## RHIOs:  Emerging Policy Issues

*Key issues to be defined with respect to RHIOs:*
- 	Geographic coverage
- 	Requirements regarding numbers of
-       stakeholders/definition of “community” project
- 	Relationship to National Health Information
-       Network (“NHIN”)
- 	Tax status of an entity
- 	Availability of Federal funding
- 	Certification/Accreditation
- 	Requirements in Federal Contracts
- 	State role in defining RHIOs

## RHIOs:  Emerging Policy Issues

*Federal role likely to be permissive encouraging innovation in marketplace, while seeking to promote federal goal of interoperability through National Health Information Network*

## RHIOs:  Emerging Business Plans

- Potential Outsource
- Partners exist

- Source:  HealthAlliant

- Regional Health Information Organization

- Information
- Technology

- Clinical
- Process
- Improvement

- Financing

- Development
- Operations
-  Security
- Training
-  Support
- NHIN Compliance

- Clinical Guidelines
- Operations
-  Implement
-  Training
-  Support

- Performance goals
- Incentive structure
- Coordination of payers and employers

- Capital

- Regulatory
- Decisions

- Public
- Relations

- Privacy and security standards
- Operating standards
- Core data set
- Clinical protocols
- Data use rules

- Marketing Strategy
- Communication Plan
- Website management
- Media management
- Performance publication

- Patient advocacy
- Patient involvement strategies

- Incentives

- Consumer
- Participation

**RHIOs are regional entities which support the development,**
** ****implementation and application of secure **
**health information exchange**

## RHIOs:  Emerging Business Plans

*CareSpark (Tennessee)*
*Indiana*
*Massachusetts*

## What Is CareSpark?

*CareSpark is a not for profit organization commit committed to better health in the central Appalachian region through collaboration,  innovation, and wise use of health information*
*10 year history of health improvement projects*
*Regional leaders concluded major improvements require regional health information exchange (HIE)*
*2 1⁄2 years on current project; $600,000 raised in 9 months*
*Filed for 501c3 not for profit status*

**Notes:**
In our region, we are ahead of most in our willingness to collaborate.  The coalition which was formed at KAHIP (Kingsport Area Health Improvement Project) in 1991 resulted in several successful health improvement projects, including Friends in Need Health Center and a project to improve drivers education and highway safety.  In 1999, the group reflected its move to a more regional perspective by changing to become the Community Health Improvement Partnership, then the Central Appalachian Health Improvement Partnership.  The effort to establish a process for exchanging health information began in December 2002, when the group realized that a quality improvement process for chronic disease management required good data for our region.  After a demonstration of the system in use with the V.A., the group discovered a similar effort in Santa Barbara California, and resolved to pursue planning for a health information exchange for our region. 

## CareSpark Tactical Plan

*To address health issues, we propose to provide technical capability and encourage clinical process improvement in the following areas:*
- Prescription Medication
- Diagnostic (lab, imaging) Services
- Preventive Medicine (immunizations / screenings)
- Chronic disease management

**Notes:**
After looking at the top health issues for our region, our clinical team then determined what information was needed to improve patient outcomes in those areas.  Our technology workgroup then defined ways to deliver that information, even as our finance workgroup was calculating the cost and the potential savings from each.

## Regional Economic ImpactAverage of First Three Project Years

- Regional Economic ImpactAverage of First Three Project Years

**Conservative**** ****Projections**

**CareSpark will help reduce unnecessary spending through coordinated regional programs and equitably share savings among participants and to fund operations.**

**$ 260 M**

**$ 48 M**

- Source:  CareSpark

**Notes:**
Our team has spent much time calculating the financial impact of this project in our region.  These numbers reflect actual current costs and documented savings from pilot projects already initiated by such partners as Eastman, John Deere, BlueCross BlueShield and Holston Medical Group.  We have been very conservative in our calculations, but we still anticipate that we would be able to capture over $48M in a three-year period by implementing programs for improvement in medication and diagnostic services. That is less than 20% of the potential savings from these two programs, so we may well exceed this amount if we attain the measures we are targeting.

##          Indiana Health Information Exchange

**Data management**

**Hospital**

**Data repository**

**Health Information Exchange**

**Network applications**

**Payers**

**Labs**

**Outpatient RX**

**Physician office**

**Ambulatory centers**

**Public health**

**Data access **
**and use**

**Hospitals**

**Physicians**

**Labs**

**Public**
**health**

**Payer**

**  ****Results delivery**
**  ****Secure document  transfer**
**  ****Shared EMR**
**  ****Credentialing**
**  ****Eligibility checking**

**  ****Results delivery**
**  ****Secure document transfer**
**  ****Shared EMR**
**  ****CPOE**
**  ****Credentialing**
**  ****Eligibility checking**

**  ****Results delivery**

**  ****Surveillance**
**  ****Reportable conditions**
**  ****Results delivery**

**  ****Secure document transfer**

**De-identified, longitudinal clinical      data**

**Researchers**

**Payer**

- Source:  IHIE

##             Massachusetts: Pilot Project 	   in 3 Communities

**            ****Massachusetts: Pilot Project ****	****   in 3 Communities**

** ****Quality**
** ****Cost**
** ****Productivity**
** ****Etc.**

**Connectivity**

**Clinical IT implementation/ support**

**Evaluation/ transformation**

**Quality measurement**
**Pilot evaluation**
**Transformation models**

**Clinical access to data**
**Data gathering and aggregation**
**Communication**

**Hardware/software**
**Implementation/tech support**
**Systems integration**
**Workflow redesign**
**Decision support**

**Intra-community connectivity**

**Management & coordination**

**Joint oversight and decision-making bodies**
**Structure, composition, process**

- Source:  MAeHC

## Emerging Models for Advancing HIT/HIE

*Grassroots*
*Convener*
*Catalyst*
*Operator*

## Emerging Models for Advancing HIT/HIE

*Grassroots*
- No Statewide, Coordinated Effort
- Driven entirely at local level – truly “allow a thousand flowers bloom”
- Examples
- Connecting for Health
- AHRQ Patient Safety and HIT Grantees

## Emerging Models for Advancing HIT/HIE

*Convener*
- Essential Tasks: Educator, Convener, Information Clearinghouse, Researcher
- Examples
- North Carolina Health Information and Communications Alliance
- MAShare
- Maryland
- Florida

## Emerging Models for Advancing HIT/HIE

*Catalyst*
- Essential Tasks: Facilitate financing, provide technical assistance and project development support to spawn regional initiatives
- Examples
- Under consideration in New York
- Kentucky
- Health Tech/Manatt Report: “Spending Our Money Wisely” Recommendations

## Emerging Models for Advancing HIT/HIE

*Operator*
- Essential Tasks: Create financing vehicle and build infrastructure for information exchange
- Examples
- Indianapolis Regenstrief Institute
- Massachusetts eHealth Collaborative

## RHIOs:  Financing, Formation and Governance

*Reviewing legal options necessitates a multi-faceted process involving an analysis of:*
- The key business decisions that first need to be made in order to define the organization’s mission and scope
- The  range of options facing the organization relative to:
- Governance Structure
- Tax Status of Legal Entity
- Terms and Conditions of Participant Agreements

## RHIOs:  Financing, Formation and Governance

- Redundancy

- Treatment

- Errors

- Diagnostic

**EMR**

**HIE**

**CDS**

- _Patient Data_

- _Medical Knowledge_

- 50% of Cost
- 20% of Return

**100%**

**RHIOs:  Financing, Formation and ****Governance**

**Notes:**
3 applications
4 ways to eliminate waste

Broad-based Decision Support Tools

EHR + CDS provide Patient Data
Like many things in life, it is the foundation

And allows creation of patient access, portability, telemedicine
And allows creation of public health surveillance, clinical research

## RHIOs:  Financing, Formation and Governance

**Physicians**

- Source:  Center for Information Technology Leadership, 2003

**Ambulatory Computer-based Physician Order Entry**

**Private Payers**
**Medicare**
**Medicaid**
**Self-insured**
**Self-pay**

**Notes:**
Substantial savings arise from cost avoidance
Formulary compliance/generic substitution
Radiology
Laboratory
ADE

## RHIOs:  Financing, Formation and Governance

- Source:  HealthAlliant

## Classes of Membership  -- Categories of interested participants (e.g., institutional providers, physicians and medical groups, other clinicians, managed care companies and insurers, local employers, public health agencies, public representatives) could be divided into “classes” and represented on the governing body by one or more representative members.
Restrictive Membership -- The governing body could consist of a limited number of members of diverse backgrounds chosen because of their leadership skills and standing in the community, their ability to articulate the views of various constituencies yet rise above those interests in determining the future of the project, etc.

*Restrictive Membership -- The governing body could consist of a limited number of members of diverse backgrounds chosen because of their leadership skills and standing in the community, their ability to articulate the views of various constituencies yet rise above those interests in determining the future of the project, etc.*

**RHIOs:  Financing, Formation and Governance**

## RHIOs:  Financing, Formation and Governance

*Virtual Model -- No new legal entity is formed; rather, the project is operated under a contractual arrangement via (a) a “hub-and-spoke” format (see e.g., original Santa Barbara design), or (b) a single agreement among the participating parties (see e.g., original Indianapolis design).*
*Non-Profit Corporation Model -- A non-profit corporation is formed to be the development and/or operating company for the project.  It could be organized to qualify as a 501(c)(3) tax-exempt organization; or it could be a taxable non-profit.  It could have only a governing board, or it could have "members" (comparable to stockholders) who elect the governing board and/or have the right to vote on certain (but not all) matters affecting the corporation/project.*

## RHIOs:  Financing, Formation and Governance

*For-Profit Corporation Model -- A for-profit corporation is formed to be the development and/or operating company for the project.  The corporation would have stockholders (who could consist of one or more classes - representing different levels of "investment", with different voting rights), who would in turn elect the members of the board of directors.*
*Limited Liability Company Model -- A limited liability company is formed to be the development and/or operating company for the project.  The operating agreement for the company would provide who holds what economic interests in the entity and their respective rights, as well as the role of a governing body (if any) distinct from the equity owners. *

## RHIOs:  Lessons from the Field

*Importance of Leadership and Creating Shared Vision Among Key Stakeholders*
*Organization of Project - Needs to be interdisciplinary and inclusive*
- Clinical
- Legal/Organization
- Financial
- Technology
- Communications
*First step is creating strategic business plan:  this will drive all future steps*
*Structure of organizational vehicle may minimize legal complexity - multi-stakeholder not-for-profit structure, with independent decision making body, will significantly reduce concerns regarding fraud and abuse and antitrust*

## RHIOs:  Lessons from the Field

*State law privacy issues may present larger hurdles to project than HIPAA*
*Largest and most complex issues involve:*
- Defining role of RHIO as compared to and in relation to role of stakeholders contracting with the RHIO
- Creating financing plan for the project;  Think of financing as occurring in three stages:
- Planning
- Development
- Operations
- Note RHIO may enable financing of certain information technology investment by outside entities; this capital/operating cost will be borne by the outside entities, not the RHIO itself.

## Conclusion

***     “******We are almost out of tricks here.  The only thing left is to reduce the illness burden on society.  Eliminating errors in the healthcare system through HIT is the best way to do that.”****** ***
***-Anonymous Commentator***