GAO-04-991R HHS’s Health Information Technology Efforts 

United States Government Accountability Office

Washington, DC 20548 

August 13, 2004 

The Honorable Judd Gregg 

Chairman 

Committee on Health, Education, Labor, and Pensions 

United States Senate 

Subject: HHS’s Efforts to Promote Health Information Technology and Legal 

Barriers to Its Adoption

Dear Mr. Chairman: 

Studies published by the Institute of Medicine and others have indicated that 

fragmented, disorganized, and inaccessible clinical information adversely affects the 

quality of health care and compromises patient safety.1 Health information 

technology (IT)—technology used to collect, store, retrieve, and transfer clinical, 

administrative, and financial health information electronically—is seen as a 

promising solution to this problem. Technologies such as electronic health records 

(EHR)2

 and bar coding of certain human drug and biological product labels have been 

shown to save money and reduce medical errors. However, only a small number of 

U.S. health care providers have fully adopted health IT. Significant financial, 

technical, cultural, and legal barriers to the adoption of health IT exist. These include 

a lack of access to capital, a lack of data standards, and resistance from health care 

providers. 

The Department of Health and Human Services (HHS), as a regulator, purchaser, 

health care provider, and sponsor of research, education, and training, has been 

working to promote the use of IT in public and private health care settings.3 There is 

no comprehensive catalogue of HHS’s health IT efforts, however, and little is known 

about the nature and extent of the legal barriers and HHS’s efforts to address them. 

 

1

See, for example, Institute of Medicine. Crossing the Quality Chasm: A New Health System for the 

21st Century: (Washington, D.C.: National Academy Press, 2001). 

2

An EHR generally includes a longitudinal collection of electronic health information about the health 

of an individual or the care provided; immediate electronic access to patient- and population-level 

information by authorized users; decision support to enhance the quality, safety, and efficiency of 

patient care; and support of efficient processes for health care delivery. 

3

Outside of HHS, the Department of Veterans Affairs (VA) and the Department of Defense (DOD) are 

considered by experts to be leaders in the use of health IT, particularly in the adoption of EHR systems 

for their constituents. 
2 GAO-04-991R HHS’s Health Information Technology Efforts 

You asked us to review HHS’s activities to promote health IT. We examined the 

following questions: (1) What are the major HHS initiatives for promoting the 

adoption of health IT by public and private health care providers? (2) What are the 

legal barriers to the adoption of health IT by health care providers, and what is HHS 

doing to surmount them? Enclosure I contains the briefing on the results of our study 

that we discussed with your staff on July 13, 2004. 

To describe HHS's health IT initiatives, we asked HHS to identify its major activities 

in this area, reviewed agency documents, interviewed relevant HHS officials, and 

incorporated information from our earlier work on health IT. We primarily focused 

on health IT used in clinical health care delivery (e.g., EHR) and did not examine 

disease surveillance systems and telemedicine. Some HHS IT initiatives we describe 

have recently been implemented or are still in the planning stages, and so results to 

date are limited. In addition, the status of the initiatives is subject to change pending 

completion of an organizational review by the newly established HHS Office of the 

National Coordinator for Health Information Technology (ONCHIT). To identify legal 

barriers, we reviewed the literature and interviewed HHS and other federal officials, 

health care providers, health care attorneys, and other health IT experts. We did not 

address barriers that may be associated with privacy and security issues. We 

performed our work from May 2004 through August 2004 in accordance with 

generally accepted government auditing standards. 

Summary 

HHS reported that it has 19 major health IT initiatives that cover a broad range of 

activities and participants. In fiscal year 2004, HHS provided about $228 million for 

these initiatives. Some of them—the Council on the Application of Health 

Information Technology (CAHIT), the National Health Information Infrastructure 

(NHII), the Consolidated Health Informatics (CHI) Initiative, and the Federal Health 

Architecture (FHA)—are designed to provide overall leadership and coordination for 

health IT across HHS, other federal agencies, and other public- and private-sector 

organizations. The majority of initiatives and most of the funding, however, are for 

health IT programmatic activities and grant programs administered by HHS operating 

divisions such as the Agency for Healthcare Research and Quality (AHRQ) and the 

Centers for Medicare and Medicaid Services (CMS). These initiatives range from 

support for the development of standard clinical terminologies to funding of 

demonstrations of health information systems. On July 21, 2004, the National Health 

Information Technology Coordinator delivered a framework for strategic action to 

the Secretary of HHS for promoting the adoption of health IT. 

Various laws present barriers to adoption of health IT, and at the time of our review 

HHS’s efforts to address these barriers had been limited in scope. Experts we 

interviewed indicated that beyond legal issues related to the privacy and security of 

health information, there are various laws—some specifically health-related and 

some not—that present barriers to the adoption of health IT. These laws involve 

fraud and abuse, antitrust, federal income tax, intellectual property, malpractice, and 

state licensing. In the area of fraud and abuse, for example, both the Physician SelfReferral (Stark) Law and the Anti-kickback Law present barriers by impeding the 
3 GAO-04-991R HHS’s Health Information Technology Efforts 

establishment of arrangements between providers—such as the provision of IT 

resources—that would otherwise promote the adoption of health IT. Because the 

laws frequently do not address health IT arrangements directly, health care providers 

are uncertain about what would constitute violations of the laws or create a risk of 

litigation. To the extent there are uncertainties and ambiguity in predicting legal 

consequences, health care providers are reluctant to take action and make significant 

investments in health IT. HHS has attempted to address some of the legal barriers 

posed by the fraud and abuse laws, but experts told us these efforts have not been 

sufficient to overcome the reluctance of the providers. Further, little attempt has 

been made by other federal agencies to address other laws that may present barriers. 

Agency Comments 

HHS reviewed a draft of this report and provided comments. HHS asked us to 

highlight other actions it has taken to advance health IT in areas such as privacy and 

security standards, disease surveillance systems, and telemedicine. However, as we 

noted in the report, our work was focused on health IT used in clinical health care 

delivery (EHR, for example) and not on other health IT issues. HHS emphasized that 

the federal anti-kickback and self-referral statutes provide important protections 

against fraud and abuse, and that exceptions or safe harbors from these statutes must 

be carefully crafted to exclude abusive arrangements. We recognize the significant 

role these laws play in deterring fraud and abuse, but the experts we consulted 

consistently told us that these laws present barriers to the adoption of health IT. In 

particular, we found that there was uncertainty about what would constitute a 

violation of the law and this uncertainty itself created a barrier for promoting 

beneficial health IT arrangements. HHS's written comments and our more detailed 

responses to them are in enclosure II. HHS also provided technical comments, which 

we incorporated as appropriate.

- - - - - 

We are sending copies of this report to the Secretary of Health and Human Services 

and other interested officials. We will also provide copies to others on request. In 

addition, the report will be available at no charge on the GAO Web site at 

http://www.gao.gov. If you or your staff have any questions or need additional 

information, please contact me at (202) 512-7119. Another contact and key 

contributors are listed in enclosure III. 

Sincerely yours, 

Janet Heinrich 

Director, Health Care—Public Health Issues 

Enclosures – 3 
4 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS’s Efforts to Promote Health 

Information Technology

and Legal Barriers to Its Adoption

Briefing for Congressional Staff

Senate Committee on Health, Education, 

Labor, and Pensions
5 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Briefing Overview

• Introduction 

• Questions

• Scope and Methodology

• Background

• Findings

• Agency Comments

• Appendixes
6 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Introduction

• Fragmented, disorganized, inaccessible clinical information adversely 

affects the quality of health care and compromises patient safety.

• Health information technology (IT)—technology used to collect, store, 

retrieve, and transfer health information electronically—is seen as a 

promising solution to this problem; however, only a small number of U.S. 

health care providers have fully adopted health IT.

• Financial, technical, cultural, and legal factors—including a lack of access 

to capital and a lack of data standards—have been identified as barriers to 

the adoption of health IT. 

• The Department of Health and Human Services (HHS) has taken steps to 

address some of these barriers, but there is no comprehensive catalogue 

of these efforts and little is known about the nature and extent of legal 

barriers.
7 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Questions

1. What are the major HHS initiatives for promoting the 

adoption of health IT by public and private health care 

providers?

2. What are the legal barriers to the adoption of health IT by 

health care providers,1 and what is HHS doing to surmount 

them?

1We did not address legal barriers related to the privacy and security of health information.
8 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Scope and Methodology

• To describe HHS's health IT initiatives, we asked HHS to identify its major 

activities in this area, reviewed agency documents, and interviewed 

relevant HHS officials. We also incorporated information from our earlier 

work on health IT.

• We primarily focused on health IT used in clinical health care delivery (e.g., 

electronic health records (EHR)) and did not examine disease surveillance 

systems and telemedicine.

• Some HHS IT initiatives we describe have recently been initiated or are still 

in the planning stages, and so results to date are limited. In addition, the 

status of the initiatives is subject to change pending completion of an 

organizational review by the newly established HHS Office of the National 

Coordinator for Health Information Technology (ONCHIT). 
9 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Scope and Methodology (continued)

• To identify legal barriers, we reviewed the literature and interviewed 

HHS and other federal officials, health care providers, health care 

attorneys, and other health IT experts. We did not address barriers 

that may be associated with privacy and security issues.

• We performed our work from May 2004 through August 2004 in 

accordance with generally accepted government auditing 

standards.
10 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Background

Description of Health IT and the Electronic Health Record 

• Health IT includes clinical systems, administrative and financial 

systems for billing and other administrative tasks, and the infrastructure 

to support them. 

• One of the essential clinical systems is the electronic health record 

(EHR).2

• An EHR generally includes

• longitudinal collection of electronic health information on the health 

of an individual or the care provided,

• immediate electronic access to patient- and population-level 

information by authorized users,

• decision support to enhance the quality, safety, and efficiency of 

patient care, and

• support of efficient processes for health care delivery.

2EHRs are also known as electronic medical records, automated medical records, and computer-based patient records, among other 

names. 
11 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Background

Benefits of Health IT

• In a previous study,3 we found examples of reported cost savings or 

other benefits in 20 health IT initiatives across the United States, 

including

• $8.6 million annual savings at a teaching hospital that replaced

outpatient paper medical charts with electronic health records

• the prevention of the administration of over 1,200 wrong drugs or 

dosages over the period of 1 year in one rural community 

hospital that used bar code technology and wireless scanners to 

verify both the identities of patients and their correct medications

• The benefits of health IT notwithstanding, there are still significant 

barriers to its adoption.

3U.S. General Accounting Office, Information Technology: Benefits Realized for Selected Health Care Functions,

GAO-04-224 (Washington, D.C.: Oct. 31, 2003).
12 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Background

Financial, Technical, and Cultural Barriers to the Adoption of 

Health IT

Financial barriers

• Inability to access high-quality IT services at affordable prices

• Need for greater access to capital

• Inability to provide evidence of return on investment

Technical barriers

• Complex and lengthy implementation processes

• Lack of uniform standards for data submission and reporting

• Inability to sufficiently integrate and incorporate changes to business processes

Cultural barriers

• Need for a better understanding of best practices for IT adoption

• Lack of leadership support from the public and private sectors

• Resistance by health care providers
13 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Background

Role of HHS and Other Federal Agencies in Promoting Health IT

• HHS, as a regulator, purchaser, health care provider, and sponsor of 

research, education, and training, has been working to promote the use of IT 

in public and private health care settings. Among its goals are to improve 

patient safety and allow quick, reliable, and secure access to information 

across the health care system.

• Outside of HHS, the Department of Veterans Affairs (VA) and the 

Department of Defense (DOD) are considered by experts to be leaders in 

the use of health IT, particularly with regard to the adoption of EHR systems 

for their constituents.4

4See appendix I for a description of existing federal EHR systems.
14 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Background

Recent Actions to Promote Health IT

• November 2001: The National Committee on Vital and Health Statistics (NCVHS), a 

public committee established to advise the Secretary of Health and Human Services 

on health data, statistics, and national health information policy, published 

Information for Health: A Strategy for Building the National Health Information 

Infrastructure. The study called for federal leadership to accelerate and coordinate 

progress on the National Health Information Infrastructure (NHII).

• 2002: The Office of the Assistant Secretary for Planning and Evaluation started the 

National Health Information Infrastructure Initiative moving forward the NCVHS 

recommendations.

• December 2003: The Medicare Prescription Drug, Improvement, and Modernization 

Act of 2003 (MMA) called for 1) a Commission on Systemic Interoperability to 

develop a comprehensive strategy for the adoption and implementation of health 

care IT standards; 2) an electronic prescription drug program; and 3) uniform 

standards on electronic prescribing recommended by NCVHS.

• April 27, 2004: The President issued an executive order establishing the position of 

the National Health Information Technology Coordinator within HHS and forming 

ONCHIT. 
15 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Background

Recent Actions to Promote Health IT (continued)

• May 6, 2004: A National Health Information Technology Coordinator 

was appointed to

• serve as the Secretary’s principal advisor for health IT issues 

and direct HHS’s health IT programs

• ensure that HHS’s health IT programs are coordinated with 

those of other federal agencies

• coordinate outreach and consultation by federal agencies with 

public and private parties (e.g., consumers, providers, payers)

• develop, maintain, and direct the implementation of a strategic 

plan to guide the nationwide implementation of interoperable5

health information technology in both the public and private 

health care sectors that will reduce medical errors, improve 

quality, and produce greater value for health care expenditures

5Interoperability is the ability of two or more systems or components to exchange information and to use the information that has been 

exchanged.
16 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS’s Major Health IT Initiatives 

Cover a Broad Range of Activities 

and Participants
17 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

• HHS reported that it has 19 major health IT initiatives in operating divisions 

across the department.

• In fiscal year (FY) 2004, HHS provided about $228 million for these 

initiatives.

• Some initiatives, reporting to the Secretary of HHS, are designed to provide 

overall leadership and coordination for health IT across HHS, other federal 

agencies, and other public- and private-sector organizations:

• Council on the Application of Health Information Technology 

(CAHIT)

• National Health Information Infrastructure (NHII) 

• Consolidated Health Informatics (CHI) Initiative

• Federal Health Architecture (FHA) 

Overview of HHS’s Major Health IT Initiatives
18 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Overview of HHS’s Major Health IT Initiatives (continued)

• However, the majority of initiatives, and most of the funding, are 

for programmatic activities and grant programs administered by 

HHS operating divisions such as the Agency for Healthcare 

Research and Quality (AHRQ) and the Centers for Medicare 

and Medicaid Services (CMS). These initiatives range from 

support for standards development to demonstrations of 

interoperable health information systems. 

• On July 21, 2004, the National Health Information Technology 

Coordinator delivered a framework for strategic action to the 

Secretary of HHS for promoting the adoption of health IT.
19 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Organization of HHS’s Health IT Initiatives

Assistant Secretary for 

Planning and Evaluation

(ASPE)

Office of Information

Resources Management

(OIRM)

Agencies Assistant Secretary

for Budget Technology

and Finance

(ASBTF) Agency for Healthcare 

Research and Quality

Centers for Medicare and 

Medicaid Services

Food and Drug Administration 

Health Resources and 

Services Administration

Indian Health Service

National Institutes of Health

NHII

FHA CHI

Secretary of HHS

NCVHS

CAHIT ONCHITa

Coordinating initiative Agencies with initiatives

Informal coordination Public advisory body

aONCHIT was established in April 2004 and is in the process of reorganizing the reporting assignments of many HHS health IT initiatives to improve and 

consolidate coordination. This chart depicts the organization of HHS’s health IT initiatives prior to this reorganization.

Source: GAO analysis of HHS information.
20 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives

Office of the Secretary

Council on the Application of Health Information Technology (CAHIT) 

An ongoing intraagency deliberative body established in June 2003 to coordinate 

efforts related to health IT and to promote a timely exchange of information about HHS activities and opportunities related to health IT 

Results to Date

• Coordinated HHS’s involvement with the Health Level Seven (HL7)6 Electronic Health 

Record Special Interest Group; in April 2004 the group approved a draft EHR 

standard for trial use

• Coordinated a series of planning meetings to best position pertinent departmental 

health IT activities that hold the promise of accelerating EHR adoption; developed an 

inventory of HHS EHR activity

• Ensured the integration of Consolidated Health Informatics (CHI) standards in HHS 

agency activities and programs through council meetings, ad hoc activities, and staff 

briefings

Funding

FY 04 - No separate funding; staff resources from Office of the Secretary

FY 05 - No separate funding; staff resources from Office of the Secretary 6HL7 is a standards development organization accredited by the American National Standards Institute.
21 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Office of the Secretary 

Assistant Secretary for Planning and Evaluation (ASPE)

National Health Information Infrastructure (NHII)

An initiative to improve the effectiveness, efficiency, and overall quality of health care in the United 

States through the creation of a comprehensive knowledge-based network of interoperable systems of 

clinical, public health, and personal health information

Results to Date

• Achieved National Committee on Vital and Health Statistics’ (NCVHS) recommendation to develop 

leadership within HHS with the appointment of the National Health Information Technology Coordinator

• Sponsored annual NHII conferences and conducted outreach to public and private stakeholders

Future Goals

• Build collaboration among stakeholders

• Develop and carry out a comprehensive strategic plan encompassing public and private health IT 

activities

Funding

FY 04 - $3 million

FY 05 - $5 million requested
22 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Office of the Secretary

Office of Information Resources Management

Consolidated Health Informatics (CHI) Initiative

An OMB e-government initiative, for which HHS was designated the lead, to establish 

federal health information interoperability standards as the basis for electronic health 

data transfer in all activities and projects and among all federal agencies 

Results to Date

• Established a set of standards to be adopted by federal agencies

Future Goal

• Integrate with the Federal Health Architecture

Funding

FY 04 - No separate funding; staff resources from Centers for Medicare and Medicaid Services

FY 05 - No separate funding; staff resources from Centers for Medicare and Medicaid Services
23 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Office of the Secretary

Office of Information Resources Management

Federal Health Architecture (FHA)

A process begun in July 2003 that is expected to define an overarching federal 

framework and methodology for establishing targets and standards for 

interoperability and communication across the federal health community, building on 

the work of the CHI initiative

Results to Date

y Established governance structures to review and coordinate health IT initiatives 

across federal agencies

y Expanded the initial health lines of business from disease surveillance to include 

EHR and food safety

Funding

FY 04 - $2.8 million

FY 05 - $3.9 million requested
24 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Agency for Healthcare Research and Quality7

Health Information Technology (HIT) Initiatives

Research and demonstration projects intended to achieve a better understanding of 

the effects of health IT on quality, safety, efficiency, and effectiveness

Results to Date

• Transforming Healthcare Quality Through IT: Funded a series of 3-year grant 

programs to demonstrate the value of health IT, plan for future HIT implementation, 

and implement partnerships of three or more entities 

• State and Regional Health IT Demonstrations: Issued a contract solicitation to 

establish and implement state and regional demonstrations of interoperable health 

information systems

• Indian Health Service’s (IHS) Resource and Patient Management System 

(RPMS): Provided funding to IHS to support needed enhancements to the IHS-EHR 

in the RPMS; investment intended to create a user-friendly data system that can 

provide community-specific health care data as well as track the health status of the 

population

7This agency and its predecessor organizations have been funding research and development in medical informatics with grants since 1968.
25 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Agency for Healthcare Research and Quality (continued)

Future Goals

• Solicit and evaluate grant applications to establish a state-of-the-art service center 

for grantees and organizations engaged in health IT diffusion activities

• Award contract for a 5-year evaluation of CMS’s Medicare Care Management 

Performance Demonstration Project, a program that explores the integration of 

EHRs in the ambulatory environment

• Coordinate work with ASPE on standards and interoperability, focusing on clinical 

messaging and terminology standards, nomenclature for drugs and biological 

products, comprehensive clinical terminology and nomenclature, and research 

related to accelerating the adoption of interoperable health IT systems

• Explore and determine the evidence base associated with certain health IT 

functions over a 13-month period 

Funding

FY 04 - $60 million8

FY 05 - $60 million requested

8This funding includes $3.2 million which AHRQ provided to the National Library of Medicine (NLM) for standards coordination.
26 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Centers for Medicare and Medicaid Services

Doctors’ Office Quality Information Technology

To promote the adoption and effective use of health IT through the provision by statebased Quality Improvement Organizations (QIO) of assistance to physician offices in 

adoption, implementation, and process redesign

Results to Date

• California’s QIO is developing a methodology for provision of assistance to physician 

offices

Future Goal

• Begin four-state pilot program in summer 2004 and national pilot in November 2004; 

full national implementation expected by August 2005

Funding

FY 04 - $5 million

FY 05 - $5 million requested
27 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Centers for Medicare and Medicaid Services (continued)

Medicare Care Management Performance Demonstration

To offer financial incentives to physician offices in four states for adopting and 

effectively using health IT

Future Goal

• Demonstration expected to be approved by HHS and OMB by summer 2004

Funding

FY 04 - $2 million for administrative costs

FY 05 - $2 million for administrative costs requested
28 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Centers for Medicare and Medicaid Services (continued)

Veterans Health Information Systems and Technology Architecture

(VistA) - Office EHR

To produce a version of VA’s EHR system for use by non-VA physician offices

Future Goal

• First release of enhanced product planned for 2005

Funding

FY 04 - $2 million

FY 05 - $1 million requested
29 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Centers for Medicare and Medicaid Services (continued)

E-prescribing Standards

To test initial electronic prescribing standards and develop, adopt, recognize, or modify 

them

Results to Date

• Participated in National Committee on Vital and Health Statistics hearings on electronic 

prescribing in March and May 2004 

Future Goals

y Develop, adopt, recognize, or modify initial standards by September 1, 2005

y Conduct pilot project during 20069

y Report to Congress on pilot project by April 1, 2007

y Promulgate final standards by April 1, 2008

y Set a date that falls between April 1, 2008 and April 1, 2009 for standards implementation

Funding

FY 04 - $600,000

FY 05 - $700,000 requested

9Pilot project will be conducted during 2006 unless the Secretary determines that the industry has adequate experience with such standards.
30 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Food and Drug Administration

Structured Product Labeling

To develop data standards that provide information found in package 

inserts in a computer-readable format for use in electronic prescribing and 

decision support, and the maintenance and distribution of medication 

terminology standards

Future Goal

• Changes to regulations are under way and are scheduled to be completed 

within 4 years

Funding

FY 04 - $4.6 million

FY 05 - $4.6 million requested
31 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Food and Drug Administration (continued)

Bar coding for prescription products

To require bar codes on most prescription drugs and on certain over-thecounter drugs to address medication errors associated with drug products 

Results to Date

• FDA issued a final rule on February 26, 2004 (69 Fed. Reg. 9120)

Funding

FY 04 - Industry funded

FY 05 - Industry funded
32 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Health Resources and Services Administration

Shared Integrated Management Information Systems (SIMIS)/

Information and Communication Technology (ICT)

A grant program developed in 1998 to significantly improve the ability of community 

health centers to collect, manage, and use information in order to be more cost 

competitive; program may include support for a chief information officer and 

installation of central network hardware and software

Results to Date

• SIMIS: funded 30 networks of health care providers, supporting 91 community health 

centers, since 1998

• ICT: funded 6 grants, supporting 51 community health centers, since 2003

Funding

FY 04 - $6.2 million

FY 05 - to be determined
33 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Health Resources and Services Administration (continued)

Integrated Services Development Initiative (ISDI)

To facilitate the integration of health care delivery systems and support integration 

efforts in five areas, one of which is information management, to improve the ability 

of community health centers to compete in the marketplace

Results to Date

• Funded 22 networks working on some form of information system or information 

technology

Funding

FY 04 - $1.5 million

FY 05 - to be determined
34 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Health Resources and Services Administration (continued)

Healthy Communities Access Program (HCAP)

A community-based program to develop or strengthen health care safety net delivery 

systems; program funds may be used for a wide range of activities, including 

information systems

Results to Date

• Supported EHRs, eligibility determination, patient referral, and disease management

Funding

FY 04 - $10 million

FY 05 - $10 million requested
35 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

Indian Health Service

Indian Health Service Electronic Health Record (IHS-EHR) Initiative

To provide order entry, results reporting, encounter documentation, and other clinical 

functionality to IHS, tribal, and urban Indian health care providers. IHS-EHR is a 

component of IHS’s Resource and Patient Management System (RPMS)10 and is 

using modified components of VA’s VistA system.

Results to Date

• Testing of IHS-EHR at four sites

Future Goals

• Implementation at 20 sites during FY 05

• Implementation at all sites by FY 08

Funding11

FY 04 - $26 million

FY 05 - $33 million requested

10See appendix I for a description of the RPMS.

11EHR costs are closely coupled with RPMS and therefore EHR funding is included as part of the annual RPMS budget.
36 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

National Institutes of Health

National Library of Medicine (NLM) Grants12

To provide research grants, contracts, and training support for advanced computer 

technologies and training in informatics (i.e., information sciences)

Results to Date

y Supported health informatics research and development, recently focusing on 

research on scalable information infrastructures for health and disaster management

y Supported training programs on clinical and bioinformatics (i.e., medical and 

biomedical informatics) 

y Funded Integrated Advanced Information Networks (networking within academic 

centers), and projects to support Internet connections and access to digital libraries 

for health science libraries and hospitals

Funding

FY 04 - $48 million

FY 05 - $49 million requested

12NLM has provided these grant programs for 20 to 30 years.
37 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

National Institutes of Health (continued)

NLM’s Support of Clinical Vocabularies

To provide support for, and development of, selected CHI standard clinical 

vocabularies13 for ongoing maintenance and free use within the United States

Results to Date

• Under contract, supported Logical Observations Identifiers Names and Codes 

(LOINC) maintenance and dissemination

y Licensed Systematized Nomenclature of Medicine Clinical Terms (SNOMEDCT) for nationwide use

y Developed RxNORM to fill gap in drug terminology

y Supported uniform distribution and mapping of Health Insurance Portability and 

Accountability Act (HIPAA) code sets for electronic exchange of health-related 

information and other vocabulary standards within the Unified Medical 

Language System (UMLS)

Funding

FY 04 - $9 million

FY 05 - $9 million requested

13Appendix II includes a description of selected health care data and communication standards supported by NLM.
38 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

National Institutes of Health (continued)

National Electronic Clinical Trials and Research (NECTAR) Network

To link clinical research information systems for sharing data and resources, 

augmenting performance and analysis, and accelerating the application of 

clinical research findings

Future Goals

• Complete inventory of current and best practices by June 2006

• Pilot and feasibility-test methods for achieving interoperability by 2006

• Continue to deploy new networks and implement best practices and

applications through 2009

Funding FY 04 - $18 million

FY 05 - $18.5 million requested
39 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS Major Health IT Initiatives 

National Institutes of Health (continued)

Cancer Biomedical Informatics Grid (caBIG)

A cancer research network of data, individuals, and organizations intended to create 

a common, distributed infrastructure for sharing of data and applications

Results to Date

• Conducted seminars and meetings on the development of an integrated 

bioinformatics infrastructure platform

Future Goal

• Complete pilot phase of development and testing of bioinformatics infrastructure 

within 3 years

Funding

FY 04 - $32 million (for pilot activities and standards development)

FY 05 - $32 million (for pilot activities and standards development) requested
40 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS IT Initiatives and Participants

Structured Product Labeling . z

z . z z z z z z Health Information Technology 

Initiatives

E-prescribing Standards z . z z

NIH

z

z

z

z

z

Private

sector

Department of Health and Human Services

. z z z z z z z z z z

Consolidated Health Informatics 

Initiative

z

z

z

VA

z

z

Other 

fed

z

State 

gov

z

z

DOD

z

VistA – Office EHR z z . z z z

. Medicare Care Management 

Performance Demonstration

Doctors’ Office Quality Information . Technology

Federal Health Architecture . z z z z z z

. z z z z z z z National Health Information 

Infrastructure

. . z z z z z Council on the Application of 

Health Information Technology

Local 

gov OS AHRQ CDC CMS FDA HRSA IHS

IT initiative

. Indicates lead operating division. Source: GAO analysis of HHS information.

z Indicates participant.
41 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

HHS IT Initiatives and Participants (continued)

. z Bar coding for prescription products

. z z z z NLM grants

Support of clinical vocabularies . z z

IHS-EHR Initiative z . z z z z

. z Integrated Services Development

Initiative

. z z Healthy Communities Access 

Program

. z

Shared Integrated Management 

Information Systems/Information 

and Communication Technology

Cancer Biomedical Informatics Grid z . z

. z z

National Electronic Clinical Trials 

and Research Network

NIH

Private

sector

Department of Health and Human Services

VA Other 

fed

State 

gov DOD Local gov OS AHRQ CDC CMS FDA HRSA IHS

IT initiative

.Indicates lead operating division. Source: GAO analysis of HHS information.

z Indicates participant.
42 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Various Laws Present 

Barriers to Adoption of 

Health IT; and HHS’s Efforts 

to Address These Barriers 

Have Been Limited
43 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Overview of Legal Barriers

• Experts we interviewed indicated that beyond legal issues related to the 

privacy and security of health information, there are various laws—some 

specifically health-related and some not—that present barriers to the 

adoption of health IT. These laws involve 

• Fraud and abuse 

• Antitrust

• Federal income tax

• Intellectual property

• Liability/malpractice

• State licensing
44 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Overview of Legal Barriers (continued)

• Because these laws frequently do not address health IT arrangements 

directly, health care providers are uncertain about what would constitute 

violations of those laws or create a risk of litigation. To the extent there are 

uncertainties and ambiguity in predicting legal consequences, health care 

providers are reluctant to take action and make significant investments in 

health IT. 

• HHS has attempted to address some of the legal barriers posed by the 

fraud and abuse laws, but experts indicated that these efforts have not 

been sufficient. Little attempt has been made by other federal agencies to 

address laws under their jurisdiction that present barriers. 
45 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Fraud and Abuse 

Physician Self-Referral (Stark) Law

• The law prohibits physicians from referring patients to an entity for certain health services if 

the physician (or an immediate family member) has a financial relationship (i.e., has an 

ownership interest in or receives compensation from) with the entity, and prohibits entities 

from billing for any services resulting from such referrals, unless an exception applies. 

42 U.S.C. § 1395nn (2000).

• The law presents a barrier by impeding the establishment of arrangements that promote 

the adoption of health IT. Specifically, because many physicians find health IT costprohibitive, hospitals or other providers are sometimes willing to provide physicians with 

hardware, software, or other resources. Parties have been reluctant to establish such 

arrangements, however, out of concern that if the physician subsequently makes a referral 

to that provider, they may be viewed as having violated the law.

• Violation may result in parties having to return any payments they received for services 

resulting from the prohibited referral, being excluded from participation in federal health 

care programs, and having to pay civil penalties.
46 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Fraud and Abuse (continued)

Anti-kickback Law

• The law prohibits an individual or entity from knowingly and willfully offering or accepting 

remuneration of any kind to induce a patient referral for or purchase of an item or service 

covered by any federal health care program. 42 U.S.C. § 1320a-7b(b) (2000).

• Like the self-referral law, it presents a barrier by impeding the establishment of certain 

arrangements that promote the adoption of health IT. Physicians may be reluctant to 

accept IT resources from a hospital or other provider, knowing that the resources may be 

viewed as remuneration and that any referrals the physician subsequently makes to the 

provider may be viewed as having been made in return for such resources in violation of 

the law.

• Violation may result in civil or criminal penalties, including exclusion from participation in 

federal health care programs and imprisonment. 
47 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Fraud and Abuse (continued)

HHS’s Efforts to Address Barriers Presented by Self-Referral and Anti-kickback Laws

• There are various statutory and regulatory exceptions to the self-referral and anti-kickback laws, but 

none are sufficient to cover all arrangements that parties may wish to establish to promote the 

adoption of health IT. In its comments on a draft of this report, HHS noted the difficulty in crafting 

safe harbors that exclude abusive arrangements.

• The Medicare Prescription Drug, Improvement and Modernization Act of 2003 requires HHS to 

establish additional limited exceptions under both laws to facilitate electronic prescribing. HHS 

officials are currently developing regulations to implement this requirement.

• On March 26, 2004, CMS issued an interim rule with comment period creating a new exception 

under the self-referral law for “community-wide health information systems,” but experts say it does 

not cover many health IT arrangements and there is a lack of clarity about what “community-wide” 

means. Additionally there is no parallel exception under the anti-kickback law. An HHS official said 

that parties can request an advisory opinion to determine whether an arrangement they are 

contemplating would violate the anti-kickback law. In response to a draft of this report, HHS noted 

that advisory opinions can also be obtained for the self-referral law. However, the process is timeconsuming and such case-by-case guidance is not an appropriate mechanism for addressing 

broader industry concerns.

• The comment period for the interim rule ended on June 24, 2004. CMS is currently engaged in 

revising the rule based on the comments including clarifying the term community-wide.

State Self-Referral and Anti-kickback Laws

• Many states have laws analogous to the federal self-referral and anti-kickback laws, some of which 

are stricter or have fewer exceptions or both.
48 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Antitrust

• Some experts are concerned that certain arrangements that may promote 

the adoption of health IT may be viewed as anticompetitive and thereby 

violate antitrust laws. 15 U.S.C. §§ 1 et seq. (2000).

• An official from the Department of Justice told us that to the extent that the 

benefits of such arrangements can be shown to outweigh any 

anticompetitive impact, they are not likely to violate federal antitrust laws.

• However, given the uncertainty about the impact of health IT arrangements 

on competition and what constitutes a violation, antitrust laws still present a 

barrier to the adoption of health IT.
49 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Federal Income Tax 

Private Inurement/Benefit

• Tax-exempt organizations that provide financial or other benefits to private 

individuals may jeopardize their tax-exempt status. Some experts are 

concerned that the provision of IT resources by tax-exempt hospitals to 

physicians may be viewed as providing just such benefits to private 

individuals. 26 U.S.C. § 501(c)(3) (2000).

Unrelated Business Income

• Tax-exempt organizations that generate income from business activities 

not substantially related to the role that qualified them for tax-exempt status 

must pay income tax on that income. Some experts are concerned that any 

charges tax-exempt hospitals impose on others for using IT resources that 

the hospitals have financed and developed may be taxable. 26 U.S.C. §§

501(b) and 513(a) (2000).
50 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Intellectual Property

Copyright Protection

• Hospitals and other entities that are investing (or considering investing) 

significant financial resources in the development of health IT systems are 

concerned that copyright protections applicable to such systems may be 

inadequate to prevent unauthorized use and they will be unable, as a 

result, to recoup their investments. 17 U.S.C. § 106 (2000). 
51 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

Liability/Malpractice

• Some physicians are concerned that the more information they have 

access to through health IT, the more information they will be held 

responsible for knowing and that this will increase their risk of being held 

liable for malpractice. 

• Physicians are generally responsible, however, for obtaining relevant 

information from patients to provide proper treatment, and the adoption of 

health IT may make it easier for physicians to obtain all relevant 

information and provide better care, which may reduce the risk of 

malpractice.
52 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Legal Barriers

State Licensing

• Physicians generally must be licensed to practice medicine in any state in 

which they practice, and state licensing requirements vary from state to 

state. If physicians provide medical advice electronically or engage in 

telemedicine across state boundaries, there is concern that they may be 

viewed as practicing medicine in a state where they are not licensed to do 

so.
53 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Appendix I

Federal Electronic Health Record Systems

The Department of Veterans Affairs’ (VA) Veterans Health Administration 

consists of 21 regional networks that support 158 hospitals, 133 nursing 

homes, and 698 community-based outpatient clinics.

• VA has had an automated information system, the Decentralized Hospital 

Computer Program (DHCP), in its medical facilities since 1985.

• In 1996 DHCP evolved into the Veterans Health Information Systems and 

Technology Architecture (VistA).

• The Computerized Patient Record System (CPRS) is the interface that 

integrates all clinical VistA data, providing clinicians with a complete EHR 

and supporting patient care in both inpatient and outpatient settings.
54 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Appendix I (continued)

The Department of Defense (DOD) operates a worldwide health care program 

that consists of 75 hospitals and 461 outpatient clinics. 

• Implementation of the Composite Health Care System II (CHCS II) began in 

March 2003 and is expected to be completed by 2008.

• CHCS II interfaces with military health care systems to provide an integrated 

EHR for care provided in DOD outpatient medical facilities.

HHS’s Indian Health Service (IHS) consists of 36 hospitals, 61 health centers, 49 

health stations, and 4 residential treatment centers.

• IHS’s Resource and Patient Management System (RPMS) is a decentralized 

automated information system with integrated software applications.

• RPMS consists of patient-based administrative applications, patient-based 

clinical applications (e.g., IHS-EHR), and financial and administrative 

applications.
55 GAO-04-991R HHS’s Health Information Technology Efforts 

Enclosure I

Appendix II

Selected Health Data and Communication Standards 

Developed, Supported, Mapped and/or Distributed by NLM

A large, multi-purpose, multi-lingual vocabulary database built from the electronic 

versions of many different thesauri, classifications, code sets, and terminologies, 

including HIPAA and CHI standards.

Unified Medical Language 

System (UMLS) 

Metathesaurus

A comprehensive clinical terminology formed by the convergence of SNOMED RT® and 

the United Kingdom's Clinical Terms Version 3 (formerly known as the Read Codes).

Systemized Nomenclature 

of Medicine Clinical Terms 

(SNOMED CT)

A clinical nomenclature that provides standard names for clinical drugs (e.g., active 

ingredient, strength, dose form) and for dose forms as administered. 

RxNorm

A standard set of universal names and codes for identifying individual laboratory and 

clinical results and allows users to merge clinical results from many sources into one 

database for patient care, clinical research, or management.

Logical Observations 

Identifiers Names and 

Codes (LOINC)

Transactions and code sets for electronic exchange of health-related information to 

perform billing or administrative functions.

Health Insurance Portability 

and Accountability Act 

(HIPAA) code sets

Comprehensive standards for the exchange of data for the purpose of simplifying the 

implementation of interfaces between health care software applications and various 

vendors, so as to reduce the need for custom interface programming.

Health Level (HL7)

messaging standards
Enclosure II Enclosure II 

56 GAO-04-991R HHS’s Health Information Technology Efforts 

Comments from the U.S. Department of Health and Human Services 
Enclosure II Enclosure II 

57 GAO-04-991R HHS’s Health Information Technology Efforts 
Enclosure II Enclosure II 

58 GAO-04-991R HHS’s Health Information Technology Efforts 
Enclosure II Enclosure II 

59 GAO-04-991R HHS’s Health Information Technology Efforts 
Enclosure II Enclosure II 

60 GAO-04-991R HHS’s Health Information Technology Efforts 

GAO’s Responses to HHS’s Comments 

HHS provided 11 specific comments about various issues in the draft report, and our 

response to these comments is as follows: 

Background and Scope of Work 

HHS commented that our briefing slides had a narrow focus and did not acknowledge 

other actions it has taken in areas such as interoperability, privacy and security 

standards for health information, and telehealth/telemedicine (comments 1, 2, and 

11). We were specifically asked by our requestor to focus our work on health IT used 

in clinical health care delivery (e.g., EHR) and not on other health IT issues. In 

addition, we were asked to look at specific legal barriers to the adoption of health IT 

that did not include privacy and security concerns. HHS also said that besides the 

self-referral and anti-kickback laws, there are other barriers to the adoption of health 

IT, including cost and physician resistance (comment 7). We described those barriers 

on page 12. HHS provided additional information about the role of the National 

Committee on Vital and Health Statistics as specified in the Medicare Prescription 

Drug, Improvement, and Modernization Act of 2003 (comment 10). We added this 

information to the background section of our briefing slides. 

Legal Barriers 

HHS stated that we failed to address the risk of fraud and abuse when hospitals or 

other entities give valuable items or services to potential referral sources (comment 

3). We recognize the role the federal fraud and abuse laws play in deterring such 

health care violations but experts consistently told us that these laws present a 

barrier to the adoption of health IT. We revised our report in response to HHS’s 

comment that is difficult to craft appropriate safe harbors that would prevent fraud 

and abuse. 

HHS disagreed that fraud and abuse and other relevant laws are unclear and that 

health care providers are uncertain about what may constitute violations of those 

laws or create risks of litigation (comment 4). However, health care providers, 

attorneys, and other experts consistently told us that they were uncertain about the 

application of the laws to health care IT and what may constitute statutory violations 

or create risks of litigation. This uncertainty constitutes a barrier for promoting 

beneficial health IT arrangements. 

HHS disagreed with our conclusion that an Office of Inspector General advisory 

opinion is of limited practical value and suggested alternative wording (comment 5). 

We revised the wording as suggested. In its technical comments, HHS also noted that 

the Secretary can issue an advisory opinion on whether a health IT arrangement 

would violate the self-referral law, and we added this information to our report. We 

also revised our report to reflect that CMS has accepted public comment on the 

March 26, 2004 interim rule and is currently engaged in rulemaking with respect to 

the definition of “community-wide” (comment 6). 
Enclosure II Enclosure II 

61 GAO-04-991R HHS’s Health Information Technology Efforts 

HHS said that there is not unanimous agreement that hospitals should pay for health 

IT used by physicians who are not employed by hospitals and who will use the IT 

resources in their office practices (comment 8). We did not suggest that hospitals 

should pay for health IT for physicians. Experts told us that if hospitals want to 

develop such arrangements, the fraud and abuse laws may be barriers. 

Finally, HHS clarified that HHS has no legal jurisdiction over antitrust, tax, 

intellectual property, malpractice liability and state licensing laws and therefore 

cannot address these barriers (comment 9). We revised our report to make this 

distinction clear. 
Enclosure III Enclosure III 

62 GAO-04-991R HHS’s Health Information Technology Efforts 

GAO Contact and Staff Acknowledgments 

GAO Contact 

Martin T. Gahart, (202) 512-3596 

Acknowledgments

In addition to the person named above, Gigi Barsoum, Anne Dievler, M. Saad Khan, 

Roseanne Price, M. Yvonne Sanchez, and Craig Winslow made key contributions to 

this report. 

(290385) 
This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 
GAO’s Mission The Government Accountability Office, the audit, evaluation and 

investigative arm of Congress, exists to support Congress in meeting its 

constitutional responsibilities and to help improve the performance and 

accountability of the federal government for the American people. GAO 

examines the use of public funds; evaluates federal programs and policies; 

and provides analyses, recommendations, and other assistance to help 

Congress make informed oversight, policy, and funding decisions. GAO’s 

commitment to good government is reflected in its core values of 

accountability, integrity, and reliability.

Obtaining Copies of 

GAO Reports and 

Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost 

is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts 

newly released reports, testimony, and correspondence on its Web site. To 

have GAO e-mail you a list of newly posted products every afternoon, go to 

www.gao.gov and select “Subscribe to Updates.”

Order by Mail or Phone The first copy of each printed report is free. Additional copies are $2 each. 

A check or money order should be made out to the Superintendent of 

Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 

more copies mailed to a single address are discounted 25 percent. Orders 

should be sent to:

U.S. Government Accountability Office

441 G Street NW, Room LM

Washington, D.C. 20548

To order by Phone: Voice: (202) 512-6000 

TDD: (202) 512-2537 

Fax: (202) 512-6061

To Report Fraud, 

Waste, and Abuse in 

Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm

E-mail: fraudnet@gao.gov

Automated answering system: (800) 424-5454 or (202) 512-7470

Congressional 

Relations

Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400

U.S. Government Accountability Office, 441 G Street NW, Room 7125 

Washington, D.C. 20548

Public Affairs Jeff Nelligan, Managing Director, NelliganJ@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149 

Washington, D.C. 20548