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26–387 2006

HEALTH CARE INFORMATION TECHNOLOGY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON WAYS AND MEANS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED NINTH CONGRESS 

FIRST SESSION 

JULY 27, 2005 

Serial No. 109–28 

Printed for the use of the Committee on Ways and Means 

( 

ii 

COMMITTEE ON WAYS AND MEANS 

BILL THOMAS, California, Chairman 

E. CLAY SHAW, JR., Florida 

NANCY L. JOHNSON, Connecticut 

WALLY HERGER, California 

JIM MCCRERY, Louisiana 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

JIM NUSSLE, Iowa 

SAM JOHNSON, Texas 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

JERRY WELLER., Illinois 

KENNY C. HULSHOF, Missouri 

RON LEWIS, Kentucky 

MARK FOLEY, Florida 

KEVIN BRADY, Texas 

THOMAS M. REYNOLDS, New York 

PAUL RYAN, Wisconsin 

ERIC CANTOR, Virginia 

JOHN LINDER, Georgia 

BOB BEAUPREZ, Colorado 

MELISSA A. HART, Pennsylvania 

CHRIS CHOCOLA, Indiana 

DEVIN NUNES, California 

CHARLES B. RANGEL, New York 

FORTNEY PETE STARK, California 

SANDER M. LEVIN, Michigan 

BENJAMIN L. CARDIN, Maryland 

JIM MCDERMOTT, Washington 

JOHN LEWIS, Georgia 

RICHARD E. NEAL, Massachusetts 

MICHAEL R. MCNULTY, New York 

WILLIAM J. JEFFERSON, Louisiana 

JOHN S. TANNER, Tennessee 

XAVIER BECERRA, California 

LLOYD DOGGETT, Texas 

EARL POMEROY, North Dakota 

STEPHANIE TUBBS JONES, Ohio 

MIKE THOMPSON, California 

JOHN B. LARSON, Connecticut 

RAHM EMANUEL, Illinois 

ALLISON H. GILES, Chief of Staff 

JANICE MAYS, Minority Chief Counsel 

SUBCOMMITTEE ON HEALTH 

NANCY L. JOHNSON, Connecticut, Chairman 

JIM MCCRERY, Louisiana 

SAM JOHNSON, Texas 

DAVE CAMP, Michigan 

JIM RAMSTAD, Minnesota 

PHIL ENGLISH, Pennsylvania 

J.D. HAYWORTH, Arizona 

KENNY C. HULSHOF, Missouri 

FORTNEY PETE STARK, California 

JOHN LEWIS, Georgia 

LLOYD DOGGETT, Texas 

MIKE THOMPSON, California 

RAHM EMANUEL, Illinois 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Ways and Means are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

iii 

C O N T E N T S 

Page 

Advisory of July 20, 2005 announcing the hearing ............................................... 2 

WITNESSES 

U.S. Department of Health and Human Services, David Brailer, M.D., Ph.D., 

National Coordinator for Health Information Technology ................................ 6 

American Health Information Management Association, Linda Kloss ............... 34 

American Medical Informatics Association, Don E. Detmer, M.D. ...................... 28 

Naples Community Hospital Healthcare System, Allen Weiss, M.D. ................. 40 

Health Policy Institute, Georgetown University, Joy L. Pritts ............................ 46 

Healthcare Leadership Council, Mary R. Grealy .................................................. 53 

SUBMISSIONS FOR THE RECORD 

Bayot, James, McKesson Corporation, San Francisco, California, statement .... 66 

Gibbons, Patricia, Mayo Foundation, Rochester, Minnesota, statement ............ 70 

Hogan, William and Vergil Slee, The Rods Laboratory (at the University 

of Pittsburgh), Pittsburgh, Pennsylvania, statement ........................................ 74 

Ignagni, Karen, America’s Health Insurance Plans, Washington, DC, letter .... 78 

Marshall, Rebecca, American Academy of Pediatrics, Elk Grove, Illinois, statement ...................................................................................................................... 79 

Orient, Jane, Association of American Physicians & Surgeons, Tucson, Arizona, statement .................................................................................................... 80 

Thomashauer, Robin, Council for Affordable Quality Healthcare, statement .... 82 

Trachtman, Richard, American College of Physicians, statement ....................... 84 

Vaughan, William, Consumers Union, statement ................................................. 89 

Yanes, Richard, Clinical Social Work Federation, Arlington, Virginia, statement ...................................................................................................................... 90 

(1) 

HEALTH CARE INFORMATION TECHNOLOGY 

WEDNESDAY, JULY 27, 2005 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON WAYS AND MEANS, 

SUBCOMMITTEE ON HEALTH, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:26 a.m., in 

room 1100 Longworth House Office Building, Hon. Nancy L. Johnson (Chairman of the Subcommittee) presiding. 

[The advisory announcing the hearing follows:] 

2 

ADVISORY 

FROM THE COMMITTEE ON WAYS AND MEANS 

SUBCOMMITTEE ON HEALTH 

FOR IMMEDIATE RELEASE CONTACT: (202) 225–3943 

July 27, 2005 

No. HL–8 

Johnson Announces Hearing on Health Care 

Information Technology 

Congresswoman Nancy L. Johnson (R–CT), Chairman, Subcommittee on Health 

of the Committee on Ways and Means, today announced that the Subcommittee will 

hold a hearing on health information technology (IT). The hearing will take place 

on Wednesday, July 27, 2005, in the main Committee hearing room, 1100 

Longworth House Office Building, beginning at 10:00 a.m. 

In view of the limited time available to hear witnesses, oral testimony at this 

hearing will be from invited witnesses only. Witnesses will include representatives 

from the public and private sectors to discuss the use of IT in the health care sector 

and the targeted actions that government should take to increase the adoption of 

health IT. However, any individual or organization not scheduled for an oral appearance may submit a written statement for consideration by the Committee and for 

inclusion in the printed record of the hearing. 

BACKGROUND: 

Greater use of IT in the health care field has the potential to reduce medical errors, improve patient care, and reduce costs; yet adoption of new technology has 

been slow. Over the past year, beginning with the Executive Order issued by President Bush that established the Office of the National Health Information Technology Coordinator, increased attention has been paid to the issue of the adoption 

of health care information technology and the need for such technology to be interoperable. 

Throughout this dialogue, questions have been raised as to the appropriate and 

ongoing role of government in facilitating the development of standards for the exchange of electronic health information, ensuring the interoperability of information 

systems, enabling private sector investments among providers, and harmonizing 

laws regarding the confidentiality of patient information. The ultimate goal is a nationwide health care information infrastructure that recognizes the role that modern 

technology can play in the health care system. 

Most recently, the Secretary of the U.S. Department of Health and Human Services (HHS) announced the formation of the American Health Information Community, chaired by Secretary Leavitt and comprised of 17 members from the public and 

private sectors, to develop IT standards and achieve health IT interoperability. At 

the same time, the Secretary released four requests for proposals seeking private 

sector input in addressing issues regarding technology standards, certification, confidentiality and security of patient information, and development of a national architecture. 

The Subcommittee has held a series of hearings on health IT, covering private 

sector initiatives, government programs, and electronic prescribing. This hearing 

will focus on recent developments in this area and ways in which Congress can best 

act to ensure continued progress. 

In announcing the hearing, Chairman Johnson stated, ‘‘Greater use of IT can dramatically improve the safety and quality of our health care system while also reducVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00006 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
3 

ing costs. I am encouraged HHS is moving forward to adopt health IT, and Congress 

wants to work with the Administration to shape the final product. I believe that a 

public-private approach appropriately recognizes the key roles that both the government and the private sector play in the critical area of health IT.’’ 

FOCUS OF THE HEARING: 

The hearing will focus on the approach currently being taken by the Administration to speed the adoption of health IT and areas where congressional involvement 

can further these efforts. 

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS: 

Please Note: Any person(s) and/or organization(s) wishing to submit for the hearing record must follow the appropriate link on the hearing page of the Committee 

website and complete the informational forms. From the Committee homepage, 

http://waysandmeans.house.gov, select ‘‘109th Congress’’ from the menu entitled, 

‘‘Hearing Archives’’ (http://waysandmeans.house.gov/Hearings.asp?congress=17). Select the hearing for which you would like to submit, and click on the link entitled, 

‘‘Click here to provide a submission for the record.’’ Once you have followed the online instructions, completing all informational forms and clicking ‘‘submit’’ on the 

final page, an email will be sent to the address which you supply confirming your 

interest in providing a submission for the record. You MUST REPLY to the email 

and ATTACH your submission as a Word or WordPerfect document, in compliance 

with the formatting requirements listed below, by close of business Wednesday, August 10, 2005. Finally, please note that due to the change in House mail policy, 

the U.S. Capitol Police will refuse sealed-package deliveries to all House Office 

Buildings. For questions, or if you encounter technical problems, please call (202) 

225–1721. 

FORMATTING REQUIREMENTS: 

The Committee relies on electronic submissions for printing the official hearing record. As always, submissions will be included in the record according to the discretion of the Committee. 

The Committee will not alter the content of your submission, but we reserve the right to format 

it according to our guidelines. Any submission provided to the Committee by a witness, any supplementary materials submitted for the printed record, and any written comments in response 

to a request for written comments must conform to the guidelines listed below. Any submission 

or supplementary item not in compliance with these guidelines will not be printed, but will be 

maintained in the Committee files for review and use by the Committee. 

1. All submissions and supplementary materials must be provided in Word or WordPerfect 

format and MUST NOT exceed a total of 10 pages, including attachments. Witnesses and submitters are advised that the Committee relies on electronic submissions for printing the official 

hearing record. 

2. Copies of whole documents submitted as exhibit material will not be accepted for printing. 

Instead, exhibit material should be referenced and quoted or paraphrased. All exhibit material 

not meeting these specifications will be maintained in the Committee files for review and use 

by the Committee. 

3. All submissions must include a list of all clients, persons, and/or organizations on whose 

behalf the witness appears. A supplemental sheet must accompany each submission listing the 

name, company, address, telephone and fax numbers of each witness. 

Note: All Committee advisories and news releases are available on the World 

Wide Web at http://waysandmeans.house.gov. 

The Committee seeks to make its facilities accessible to persons with disabilities. 

If you are in need of special accommodations, please call 202–225–1721 or 202–226– 

3411 TTD/TTY in advance of the event (four business days notice is requested). 

Questions with regard to special accommodation needs in general (including availability of Committee materials in alternative formats) may be directed to the Committee as noted above. 

f 

4 

Chairman JOHNSON. Good morning, everyone, and a special 

welcome to Dr. Brailer and the rest of the panelists. My personal 

apologies to Congressman Stark and Congressman Thompson for 

the delay in the start of this hearing. As some of you may know, 

the President was at the Republican Conference and sometimes he 

is very digressive and covers a lot of territory, and if you are in the 

middle of the room, you can’t get up and walk out, so my apologies, 

but I didn’t anticipate the problem. Today, I am pleased to chair 

this hearing on the use of information technology (IT) in the health 

care sector. In the last Congress, we held two hearings on this 

topic, and today, we have an opportunity to revisit this issue to 

learn what progress has been made over the last year. In addition, 

I hope to focus our discussion on what Congress can do to further 

the efforts of the administration and the private sector in increasing the adoption of health IT. Greater use of IT has the potential 

to dramatically improve the safety and quality of health care for 

Americans, while at the same time lowering costs through reductions in clinical errors and elimination of redundant procedures. 

Yet despite these benefits, widespread adoption of IT in the 

health field has been disappointingly slow. I have long supported 

efforts to increase the use of IT in the health sector. In the 108th 

Congress, I introduced H.R. 2915, the National Health Information 

Infrastructure Act. I am currently working on a follow-up piece of 

legislation that takes a simple, streamlined approach to addressing 

this issue by focusing exclusively on those areas in which Congress 

needs to intervene in order to promote greater adoption of health 

IT by all providers. I am encouraged by the steps that this administration has taken recently to engage in a public-private partnership to move the health IT agenda forward with the announcement 

of the American Health Information Community (AHIC), and the 

release of four requests for proposals to address the key areas in 

this field, that is the development of standards, certification of 

products, protection of patient information, and creation of a nationwide platform for electronic health information exchange. 

I believe that we will see real progress in the months ahead and 

I just want to commend Secretary Leavitt and Dr. Brailer for the 

breadth of their vision and the foresight of their work. These dramatic proposals are eliciting new thought from the nation at a level 

that portends progress in the future at a rate impossible without 

this kind of leadership. So, I welcome Dr. Brailer and all those who 

will testify and help us understand the progress that has been 

made to date in this area and additional ways in which Congress 

can advance the health IT agenda. Dr. Brailer has been with us before. He was named the National Health Information Technology 

Coordinator last year. Shortly after his appointment, Dr. Brailer 

produced a framework for strategic action to guide the Federal 

Government’s effort in this area and he has been leading the administration’s efforts to increase adoption of health IT in both the 

public and private sectors. I have attended a number of the conferences that he has scheduled, and honestly, the breadth of involvement of people from the private sector, not only technology 

people, but health delivery people and academics, has really been 

impressive and has made a difference in the speed at which we, as 

5 

a nation, can move forward in this difficult but very important 

area. 

On our second panel, I am pleased to welcome a distinguished 

group who can help us sort through some of the more technical 

challenges we face in this field. Dr. Don Detmer is President and 

chief executive officer (chief executive officer) of the American Medical Informatics Association (AMIA), a current member of the Commission on Systemic Interoperability that was created under the 

Medicare Modernization Act, and a past Chairman of the National 

Committee on Vital Statistics. He will provide us with his insights 

as to the need for Federal leadership in the health IT arena and 

offer specific suggestions of the ways in which Congress can continue to move this issue forward. Linda Kloss is the Chief Executive Officer of the American Health Information Management Association. She will discuss particular challenges we face in coding for 

new medical technologies and the need to update our coding system 

to keep pace with the modern medical world. Dr. Allen Weiss, 

President of the Naples Community Hospital Healthcare System in 

Florida, will provide us with some real-world insight into the benefits that can be derived from implementing a health care IT system 

along with a better understanding of the challenges he has faced 

in making a paperless health care system a reality. Joy Pritts, Assistant Research Professor at the Health Policy Institute at Georgetown University will discuss issues relating to maintaining the confidentiality of patient information so important to all of us. 

Finally, Mary Grealy with the Health Care Leadership Council 

will discuss the challenges that health care providers and others 

face in navigating the myriad State and Federal regulations geared 

toward protecting patient information and how the existence of 

many layers of regulations may impede the adoption of health care 

IT. Incidentally, I would just say these two contrasting views, with 

the depth of knowledge and experience behind them, will be very 

helpful to the Committee. I look forward to hearing from all our 

witnesses and thank you for being with us today. Mr. Stark, I 

would like to invite you to make an opening statement. 

Mr. STARK. Thank you, Madam Chair. I am afraid that while 

the administration can get its act together on soliciting votes for 

the Central America Free Trade Agreement, I wish we could have 

the same kind of direction on bringing the medical delivery system 

into the, at least, 20th century before the 21st century is over. We 

are going to hear this morning from our lead witness about more 

meetings and conferences than one could believe possible and relatively nothing about getting the job done. Now, on the other hand, 

another employee of the U.S. Department of Health and Human 

Services tells us that next week, they are going to get something 

done, and I am beginning to wonder whether the right and the left 

hand speak to each other. We are going to hear that we brought 

a bunch of chief executive officers together from companies with 

such greater experience in delivering health care as Wal-Mart, but 

this leadership panel, which had basically no representation for patients or beneficiaries on it, did say that the key imperative that 

the Federal Government should act as the leader, catalyst, and 

convener of our IT effort. Yet in the same testimony, we are going 

to hear that there is an idea that this new community of health 

6 

care information will be turned over to the private sector in 5 

years. It sounds to me like the administration can’t decide what 

they want to do. They do suggest that—the President suggested in 

2004 a deadline. Albeit 10 years, it is something that many of us 

think might have a good effect on getting people moving. 

Now, as I say, we are going to hear an awful lot of discussion 

about consultation and harmonization, which I used to think was 

a mathematical result of a wave study, but harmonization may 

have something to do with doctors and patients gathering information. Dr. McClellan, on the other hand, has told us that on August 

1, the Centers for Medicare and Medicaid Services (CMS) staff is 

going to release the Veterans VISTA program and it will be a 

stand-alone and allow an in-office electronic health record (EHR) 

that contains computerized medical records, a medication formula 

with refill and drug interaction notification. It is a reminder system 

for preventative services, which I know the chair is interested in, 

and diagnostic tests, a potential to communicate electronically with 

other systems in the future. It is free. It is in the public domain. 

It is an open system. It is scalable and allows major software developers to devise add-on enhancements. It is basically the system 

that we could start with tomorrow and is acclaimed as being quite 

good. All it seems to me is it takes is the current administration, 

and I suspect they have the authority to do this without legislation, 

but I also suspect that we would be glad to pass it if they need it, 

why don’t we get started? It is beyond me why we are having all 

these therapy sessions when we could get started and install the 

software. So, I will look forward to hearing not only about that. 

The lead witness earlier suggested to us that Health Insurance 

Portability and Accountability Act 1996 (HIPAA) (P.L. 104–191) 

was an unmitigated disaster, so I would like to hear a little bit 

more about how he intends to protect the privacy of the American 

people, but we will leave that to his testimony. Thank you, Madam 

Chair. 

Chairman JOHNSON. Dr. Brailer, welcome. 

STATEMENT OF DAVID BRAILER, M.D., PH.D., NATIONAL COORDINATOR FOR HEALTH INFORMATION TECHNOLOGY, U.S. 

DEPARTMENT OF HEALTH AND HUMAN SERVICES 

Dr. BRAILER. Thank you, Chairwoman Johnson and Ranking 

Member and fellow Californian Stark and other members of the 

Committee. I have submitted my written testimony, and with your 

consent, I will give only brief remarks and then answer your questions. Our efforts to advance health IT are now fully underway. 

There are numerous initiatives that are going on today across the 

nation in the administration, which I will talk about principally 

now, but also in numerous States, including many of the States you 

represent, local and regional grassroots projects, and certainly in 

other agencies and in the private sector. We certainly welcome the 

interest in health IT from this Subcommittee and elsewhere in 

Congress. We are focusing on setting a foundation for health IT 

that is long-term, not just to solve an immediate problem today, 

but to create the foundations for a very long-term sustained transformation of health care. We want this to be market-based, to be 

non-regulatory, and with a primary focus on improving our health 

7 

care system’s safety and quality, cost effectiveness, and consumer 

involvement as well as threat preparedness. 

Briefly, there are three foundations of what we are doing. First 

is clinically, and I am sure you know this quite well. We want to 

make sure that clinicians have access to information that can prevent errors and deaths, that they can make evidence-based treatment decisions and be able to reduce redundant tests and unnecessary treatments. We want to bring together different clinicians so 

they can work as a team to deliver care and to care for the whole 

patient. We want to get information to consumers so that they can 

manage their health, make treatment decisions, and choose providers based on good evidence. There are business foundations of 

our effort, as well. These arrive from strong support in the private 

sector for the use of health IT to enable further competitiveness of 

American industry, to continue to improve the health status of the 

employees who work in our commercial industries, to bring productivity and employment improvements to health care, as IT has 

brought to other industry sectors, and as an added benefit, to develop high-tech jobs in the health care industry across the United 

States. The Federal Government has been called upon to be a leader, a catalyst, and a convener and to use collaborative methods to 

pull stakeholders together and move this forward and to use our 

purchasing power to drive results. 

We also have a technical foundation that has been set that is 

built around strong support for interoperability as a foundational 

element in the health care system. The key findings from the RFI 

that we sent to industry over the past 6 months have had more 

than 500 respondents from across sectors, had calls for public-private collaboration, information that is patient-centric, strong and 

advanced safeguards for privacy, a centralized, regionally governed 

initiative, and a nationwide communication standard and an architecture. We see two fundamental challenges and, therefore, have 

two core strategies in our initiative. First is to drive interoperability and second is to drive EHR adoption and the adoption of 

other related health information technologies. Interoperability is 

essentially about getting information where it is needed when it is 

needed. Most clinical value is tied up in the ability to share health 

information among different providers, yet today, we have very little sharing and health information is often regarded as a proprietary asset of the organization. We can’t empower consumers without getting their information together in one place in a usable manner, and this is really the functional test of are we an interoperable 

health care system. For years, we have sought integratedness and 

information is now the key strategy that is being focused on. 

The other component is getting EHRs into the hands of providers. There is a large gap between the adoption of large and 

small providers regarding their use of these tools. Large organized 

health care systems and physician groups have the know-how and 

resources to put in health IT, to implement it, to use it, to change 

their practices around it, and they are the ones that are driving 

most of the reported adoption. Smaller providers, small physician 

offices, small hospitals, safety net clinics, have substantial economic know-how, business operation and market barriers to health 

IT. These are not a result of the software, these are the result of 

8 

the huge change in their organizations that they stand for. Because 

of perverse incentives in reimbursement, most health IT adoption 

is being driven strategically today. We have taken on an interoperability forward strategy. That means that we have focused principally on how to make sure that as IT adoption occurs, it can 

share information. I will briefly summarize the key strategies we 

are doing today. 

First is standards harmonization, which has the goal of making 

sure that the United States has one single usable and unified set 

of information standards. Many other countries already have these 

and we have lagged behind and we want to make sure that we can 

protect our hospitals and clinicians from having to deal with overlaps, ambiguities, and gaps in standards. Second is compliance certification. We want to make sure that EHRs and other health IT 

do meet minimal standards for clinical content, for security, and for 

information sharing so we can make sure that patient information 

can be gathered from different sources, we can protect and secure 

information in these tools, and we can prompt physicians with 

needed preventative care and orders and other alerts that are part 

of routine care and treatment. We want to develop an architecture 

for sharing of information that would be Internet-based and built 

around the concept of high security that is used in other applications. We want to make sure that we have a capacity in industry 

to share health information so that doctors do not have to do this 

without help. Finally, we are focusing on addressing variations in 

privacy and security practices across states and across covered entities. Our goal is to ensure that not only State-to-State variation 

can be reduced, but more importantly, that covered entity-to-covered entity variation can be reduced, as well, so that we don’t have 

to choose between flexibility of security and privacy and interoperability. Chairman Johnson, I appreciate your leadership. I appreciate the interest of the Subcommittee and I certainly look forward 

to answering your questions. 

[The prepared statement of Dr. Brailer follows:] 

Statement of David Brailer, M.D., Ph.D., National Coordinator for Health 

Information Technology, U.S. Department of Health and Human Services. 

Chairwoman Johnson and Members of the Subcommittee, I am Dr. David Brailer, 

the National Coordinator for Health Information Technology. The Office of the National Coordinator for Health Information Technology is a component of the Department of Health and Human Services (HHS). Thank you for inviting me to testify 

today on health information technology activities underway in the Department. 

Setting the Context 

On April 27, 2004, the President signed Executive Order 13335 (EO) announcing 

his commitment to the development and nationwide implementation of an interoperable health information technology infrastructure to improve efficiency, reduce medical errors, raise the quality of care, and provide better information for patients, 

physicians, and other health care providers. In particular, the President called for 

widespread adoption of electronic health records (EHRs) within 10 years so that 

health information will follow patients throughout their care in a seamless and secure manner. Toward that vision, the EO directed the Secretary of the Department 

Health and Human Services (HHS) to establish within the Office of the Secretary 

the position of National Coordinator for Health Information Technology (National 

Coordinator), with responsibilities for coordinating Federal health information technology (health IT) programs with those of relevant executive branch agencies, as 

well as coordinating with the private sector on their health IT efforts. On May 6, 

2004, Secretary Tommy G. Thompson appointed me to serve in this position. 

9 

On July 21, 2004, during the Department’s Health IT Summit, we published the 

‘‘Framework for Strategic Action: The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care,’’ (The Framework). 

The Framework outlined an approach toward nationwide implementation of interoperable EHRs and in it we identified four major goals. These goals are: 1) inform 

clinical practice by accelerating the use of EHRs, 2) interconnect clinicians so that 

they can exchange health information using advanced and secure electronic communication, 3) personalize care with consumer-based health records and better information for consumers, and 4) improve public health through advanced bio-surveillance methods and streamlined collection of data for quality measurement and research. The Framework has allowed many industry segments, sectors, interest 

groups, and individuals to review how health IT could transform their activity or 

experience, consider how to take advantage of this change, and to participate in ongoing dialogue about forthcoming efforts. My office has obtained significant additional input concerning how these four goals can best be met. 

• We have consulted with, and actively partnered with, numerous federal agencies in the U.S. Government including the Departments of Veterans Affairs, Defense, Commerce, and Homeland Security. • We have met with many organizations and individuals representing stakeholders of the healthcare system to obtain their individual views. • We have reached out to states and regions through site visits and town hall 

meetings to understand the health IT challenges experienced at the local level 

as well as best practices for the use of, and collaboration regarding, health IT. 

• We have regularly testified before, and been informed by, the National Committee on Vital and Health Statistics (NCVHS) on issues critical to the nation’s 

health IT goals. 

• We have monitored, and coordinated with, the efforts of the Commission for 

Systemic Interoperability. (The Medicare Modernization Act called for the Secretary to establish the Commission to develop a comprehensive strategy for the 

adoption and implementation of health care information technology standards 

that includes a timeline and prioritization for such adoption and implementation.) and 

• We have met with delegations involved with health IT from other countries, including Canada, Netherlands, Japan, Australia, Great Britain, and France to 

learn from their individual country experiences. 

The Framework for Strategic Action and the Federal Health Architecture (FHA) 

are irrevocably linked in the effort to address critical health care needs. The FHA 

is now under the leadership of the ONC and will provide the structure or ‘‘architecture’ for collaboration and interoperability among federal health efforts as specified 

in the Framework for Strategic Action. Moreover, the Consolidated Health 

Informatics activities are now moving forward under the FHA. 

Building on the EO, The Framework, and this input, we have developed the clinical, business, and technical foundations for the HHS health IT strategy. Let me 

turn to some of those now. 

The Clinical Foundation: Evidence of the Benefits of Health IT 

We believe that health IT can save lives, improve care, and increase efficiency and 

potentially reduce costs in our health system. Five years ago, the Institute of Medicine (IOM) estimated that as many as 44,000 to 98,000 deaths occur each year as 

the result of medical errors. Health IT, through applications such as computerized 

physician order entry can help reduce medical errors and improve quality. For example, studies have shown that adverse drug events have been reduced by as much 

as 70 to 80% by targeted programs, with a significant portion of the improvement 

stemming from the use of health IT. 

Every primary care physician knows what a recent study in the Journal of the 

American Medical Association (JAMA) showed: that clinical information is frequently missing at the point of care, and that this missing information can be harmful to patients. That study also showed that clinical information was less likely to 

be missing in practices that had full electronic records systems. Patients know this 

too and are taking matters into their own hands. A recent survey by the Agency 

for Health Care Research and Quality (AHRQ) with the Kaiser Family Foundation 

and the Harvard School of Public Health found that nearly 1 in 3 people say that 

they or a family member have created their own set of medical records to ensure 

that their health care providers have all of their medical information. 

Some researchers estimate that savings from the implementation of health IT and 

corresponding changes in care processes could range anywhere from 7.5 percent of 

health care costs (Johnston et al., 2003; Pan et al, 2004) to 30 percent (Wennberg 

10 

et al., 2002; Wennberg et al., 2004; Fisher et al., 2003; Fisher et al., 2003). These 

estimates are based in part on the reduction of obvious errors. For example, a medical error is estimated to cost, in 2003 dollars, about $3,700 (Bates et al, 1997). 

However, these savings are not guaranteed through the simple acquisition of health 

IT. If poorly designed or implemented, health IT will not bring these benefits, and 

in some cases may even result in new medical errors and potential costs. Further, 

these are estimates which we have not yet seen realized in the health care system 

generally. 

Therefore, achieving efficiency and potential cost savings requires a much more 

substantial transformation of care delivery that goes beyond simple error reduction. 

Health IT must be combined with real process change in order to see meaningful 

improvements in our delivery system and systems must be standards compliant and 

interoperable so that patient information can be communicated to all possible points 

of care. It requires the industry to follow the best diagnostic and treatment practices 

everywhere in the nation. For example, cholesterol screenings can lead to early 

treatment, which in turn can reduce the risk for heart disease. Where that has been 

done, there have been substantial savings on cardiac expenditures. 

So, this is the clinical foundation for our work, which demonstrates that health 

IT can save lives, improve care, and improve efficiency in our health system; now 

let me turn to the business foundation. 

The Business Foundation: The Health IT Leadership Panel Report 

Recognizing that the healthcare sector lags behind most other industries in its use 

of IT, an HHS contractor convened a Health IT Leadership Panel for the purposes 

of understanding how IT has transformed other industries and how, based upon experiences of members of the panel, it can transform the health care industry. 

The Leadership Panel was comprised of nine CEOs from leading companies that 

purchase large quantities of healthcare services for their employees and dependents 

and that do not operate in the healthcare business. The Leadership Panel included 

CEOs from FedEx Corporation, General Motors, International Paper, Johnson Controls, Target Corporation, Pepsico, Procter & Gamble, Wells Fargo, and Wal-Mart 

Stores. The business leaders were called upon to evaluate the need for investment 

in health information technology and the major roles for both the government and 

the private sector in achieving widespread adoption and implementation. Based 

upon their own experiences using IT to reengineer their individual business—and 

by extension, their industries—the Leadership Panel concluded that investment in 

interoperable health IT is urgent and vital to the broader U.S. economy due to rising health care demands and business interests. 

As identified by the Lewin Group, the Leadership Panel concluded: 

• Potential benefits of health IT far outweigh manageable costs. 

• Health IT needs a clear, broadly motivating vision and practical adoption strategy. 

• The federal government should provide leadership, and industry will engage 

and follow. 

• Lessons of adoption and success of IT in other industries should inform and enhance adoption of health IT. 

• Among its multiple stakeholders, the consumer—including individual beneficiaries, patients, family members, and the public at large—is key to adoption 

of health IT and realizing its benefits. 

• Stakeholder incentives must be aligned to foster health IT adoption. 

The Leadership Panel identified as a key imperative that the Federal government 

should act as leader, catalyst, and convener of the nation’s health information technology effort. The Leadership Panel also emphasized that federal leverage as purchaser and provider would be needed—and welcomed by the private sector. Private 

sector purchasers and health care organizations can and should collaborate alongside the federal government to drive adoption of health IT. In addition, the Leadership Panel members recognized that widespread health IT adoption may not succeed 

without buy-in from the public as health care consumer. Panelists suggested that 

the national health IT vision must be communicated clearly and directly to enlist 

consumer support for the widespread adoption of health IT. 

These findings and recommendations from the Leadership Panel were published 

in a report released in May 2005 and laid the business foundation for the HHS 

health IT strategy. Now, let me turn to the technical foundation. 

The Technical Foundation: Public Input Solicited on Nationwide Network 

HHS published a Request for Information (RFI) in November 2004 that solicited 

public input about whether and how a Nationwide Health Information Network 

(NHIN) could be developed. This RFI asked key questions to guide our underVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00014 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
11 

standing around the organization and business framework, legal and regulatory 

issues, management and operational considerations, standards and policies for interoperability, and other considerations. 

We received over 500 responses to the RFI, which were reviewed by a government-wide RFI Review Task Force. This Task Force was comprised of over 100 Federal employees from 17 agencies, including the Departments of Homeland Security, 

Defense, Veterans Affairs, Treasury, Commerce, Health and Human Services, as 

well as multiple agencies within the departments. The resulting public summary 

document has begun to inform policy discussions inside and outside the government. 

We know that the RFI stimulated substantial and unprecedented discussions 

within and across organizations about how interoperability can really work, and we 

have continued to build on this. These responses have yielded one of the richest and 

most descriptive collections of thoughts on interoperability and health information 

exchange that has likely ever been assembled in the U.S. As such, it has set the 

foundation for actionable steps designed to meet the President’s goal. 

While the RFI report is an illustrative summary of the RFI responses and does 

not attempt to evaluate or discuss the relative merits of any one individual response 

over another, it does provide some key findings. Among the many opinions expressed by those supporting the development of a NHIN, the following concepts 

emerged: 

• A NHIN should be a decentralized architecture built using the Internet, linked 

by uniform communications and a software framework of open standards and 

policies. • A NHIN should reflect the interests of all stakeholders and be a joint public/ 

private effort. • A governance entity composed of public and private stakeholders should oversee 

the determination of standards and policies. • A NHIN should provide sufficient safeguards to protect the privacy of personal 

health information. • Incentives may be needed to accelerate the deployment and adoption of a 

NHIN. • Existing technologies, federal leadership, prototype localized or regional exchange efforts, and certification of EHRs will be the critical enablers of a NHIN. • Key challenges to developing and adopting a NHIN were listed as: the need for 

additional and better refined standards; addressing privacy concerns; paying for 

the development and operation of, and access to the NHIN; accurately verifying 

patients’ identity; and addressing discordant inter—and intra-state laws regarding health information exchange. 

Key Actions 

Building on these steps, two critical challenges to realizing the President’s vision 

for health IT are being addressed: a) interoperability and the secure portability of 

health information, and b) electronic health record (EHR) adoption. Interoperability 

and portability of health information using information technology are essential to 

achieve the industry transformation goals sought by the President. 

To address these challenges, HHS is focusing on several key actions: harmonizing 

health information standards; certifying health IT products to assure consistency 

with standards; addressing variations in privacy and security policies that might 

pose challenges to interoperability; and, developing an architecture for nationwide 

sharing of electronic health information. HHS has allocated $85 million to achieve 

these and other goals in FY 2005 and has requested $125 million in FY 2006. These 

efforts are inter-related, and they will be coordinated through the formation of a 

new collaborative known as the American Health Information Community. 

American Health Information Community (the Community) 

On July 14, 2005, Secretary Michael Leavitt formally announced the formation of 

a national collaboration, the American Health Information Community (the Community), a public-private body formed pursuant to the Federal Advisory Committee Act. 

The Community is being formed for the purposes of helping transition the nation 

to electronic health records in a smooth, market-led way. The Community will provide input and recommendations to the Secretary on use of common standards and 

how interoperability among EHRs can be achieved while assuring that the privacy 

and security of those records are protected. And, it will be designed as an open, 

transparent and inclusive collaboration. 

HHS is currently soliciting nominations for people to serve on the Community and 

Secretary Leavitt will appoint up to 17 commission members, including himself as 

chairperson. It will consist of nine members from the public sector and eight members from the private sector. Public Sector members will be drawn from Department 

12 

of Health and Human Services (including the Office of the Secretary, the Centers 

for Medicare and Medicaid Services, and the Public Health Service), Department of 

Veterans Affairs, Department of Defense, Department of Commerce, Department of 

the Treasury, Office of Personnel Management, and a State government representative. The private sector membership will be drawn from purchasers, third-party payers, hospitals, physicians, nurses, ancillary services (e.g., lab or pharmacy), consumer and privacy interests, and health information technology. Nominations for 

membership are being accepted through August 5, 2005. The Community is expected to be convened early this fall. 

The Community will start by building on the vast amount of standardization already achieved inside and outside the healthcare industry. Specifically, the Community will: 

• Make recommendations on how to maintain appropriate and effective privacy 

and security protections. 

• Identify and make recommendations for prioritizing health information technology achievements that will provide immediate benefits to consumers of 

health care (e.g., drug safety, lab results, bio-terrorism surveillance, etc.). 

• Make recommendations regarding the ongoing harmonization of industry-wide 

health IT standards and a separate product certification and inspection process. 

• Make recommendations for a nationwide architecture that uses the Internet to 

share health information in a secure and timely manner. 

• Make recommendations on how the Community can be succeeded by a privatesector health information community initiative within five years. (The sunset of 

the Community, after no more than five years, will be written into the charter.) 

The Community will be chartered for two years, with the option to renew and duration of no more than five years. The Department intends for the Community to 

be succeeded within five years by a private-sector health information community initiative that, among other things, would set additional needed standards, certify new 

health information technology, and provide long-term governance for health care 

transformation. 

In addition to the formation of the Community, the Office of the National Coordinator issued four requests for proposals (RFPs). The outputs of the contracts stemming from these RFPs will, in part, serve as inputs for the Community’s consideration. We expect to award contracts based on these RFPs in September and October 

2005. Specifically, the RFPs will focus on four major areas: 

Standards harmonization 

We have issued a Request For Proposal (RFP) to develop, prototype and evaluate 

a process to harmonize industry-wide standards development, and also unify and 

streamline maintenance of and refinements to existing standards over time. Today, 

the standards-setting process is fragmented and lacks coordination, resulting in 

overlapping standards and gaps in standards that need to be filled. We envision a 

process where standards are identified and developed around real scenarios—i.e., 

around use cases or breakthroughs. A ‘‘use case’’ is a technology term to describe 

how actors interact in specific value-added scenarios—for example, rapidly assembling complete patient information in an emergency room; we also call them ‘‘breakthroughs’’. 

Compliance certification 

We have issued an RFP to develop, prototype and evaluate a process to specify 

criteria for the functional requirements for health IT products—beginning with ambulatory EHRs, then inpatient EHRs, and then the infrastructure components 

through which EHRs interoperate (e.g., NHIN architecture). This RFP will also 

evaluate a process for inspection based on conformance with these criteria. 

NHIN Architecture 

We have issued an RFP to develop models and prototypes for a NHIN for widespread health information exchange that can be used to test specialized network 

functions, security protections and monitoring, and demonstrate feasibility of scalable models across market settings. The NHIN architecture will be coordinated with 

the work of the Federal Health Architecture and other interrelated RFPs. The goal 

is to develop real solutions for nationwide health information exchange and ultimately develop a market—particularly the supply side—for health information exchange, which does not exist today. This RFP will fund 6 architectures and operational prototypes that will maximize the use of existing resources such as the 

Internet, and will be tested simultaneously in three markets with a diversity of providers in each market. HHS intends to make these prototype architectures available 

13 

in the public domain to prevent control of ideas and design. Through the RFP process, we encourage the development of a complete open source solution. 

Security and privacy 

We issued an RFP to assess variations in state laws and organization-level business policies around privacy and security practices, including variations in implementations of HIPAA privacy and security requirements that may pose challenges 

to automated health information exchange and interoperability. This RFP, administered by AHRQ, will seek to define workable mechanisms and policies to address 

these variations, while maintaining the levels of security and privacy that consumers expect. 

Fraud and Abuse Study 

In addition, HHS has a 6-month project underway to determine how automated 

coding software and a nationwide interoperable health information technology infrastructure can address healthcare fraud issues. The project is being conducted 

through a contract with the Foundation of Research and Education (FORE) of the 

American Health Information Management Association (AHIMA). 

While only a small percentage of the estimated 4 billion healthcare claims submitted each year are fraudulent, the total dollars in fraudulent or improper claims 

is substantial. The National Health Care Anti-Fraud Association (NHCAA) estimates that healthcare fraud accounts for 3 percent of U.S. health expenditures each 

year, or an estimated $56.7 billion. They cite other estimates, which may include 

improper but not fraudulent claims, as high as 10 percent of U.S. health expenditures or $170 billion annually. 

At present, the contractor is working to perform two main tasks. One task is a 

descriptive study of the issues and the steps in the development and use of automated coding software that enhance healthcare anti-fraud activities. The second 

task is identifying best practices to enhance the capabilities of a nationwide interoperable health information technology infrastructure to assist in prevention, detection and prosecution, as appropriate, in cases of healthcare fraud or improper claims 

and billing. An expert cross-industry committee composed of senior level executives 

from both the private and public sectors is guiding this second task. 

The project’s final report is scheduled for completion in September 2005. 

Conclusion 

Thank you for the opportunity to present this summary of the activities of the 

Office of the National Coordinator for Health Information Technology. A year ago, 

the President created this position by Executive Order. In that time, we have established the clinical, business and technical foundations for the HHS health IT strategy. Now, we have begun to execute key actions that will give us real, tangible 

progress toward that goal. 

HHS, under Secretary Leavitt’s leadership, is giving the highest priority to fulfilling the President’s commitment to promote widespread adoption of interoperable 

electronic health records—and, it is a privilege to be a part of this transformation. 

This concludes my prepared statement. I would be delighted to answer any questions that you or the Members of the Subcommittee may have. 

f 

Chairman JOHNSON. Thanks very much, Dr. Brailer. Dr. 

Brailer, you state in your testimony that the Federal Government 

should act as a leader, catalyst, and convener of the nation’s health 

IT effort. Why is the Federal Government role so critical in this effort when other industries have managed to incorporate technology 

without significant Federal intervention, and how do you see the 

Federal role evolving in the coming decade? At the same time, 

would you also address, in terms of the Federal Government’s role, 

when you say you want to develop one usable set of standards, at 

some point, will the Federal Government say, this is the standard 

and this is the standard everyone has to meet? 

Dr. BRAILER. Yes. Thank you. We have seen many industries 

have long-term conversions to new ways of doing business by using 

IT and much of the sustained productivity improvements in our 

economy come from the dividends we are reaping from that. Health 

14 

care has lagged behind, and I think there are a couple of reasons 

that also call for why the Federal Government is involved in this. 

First, we are a very large purchaser of health care services, as you 

all know, and without the Federal Government acting, too little 

purchasing power in the private sector can be focused on the 

changes that are needed to be done. Second, we do have a number 

of regulations and practices, including the way we reimburse for 

care today, that provide disincentives to the kinds of technology 

that we want to put in place and the kinds of quality that we want 

to see produced. This has been widely discussed. So, the Federal 

Government acting as a catalyst and a leader means that we are 

going to move forward and address our policies and our purchasing 

practices in concert with the industry so that there is a unified 

movement toward the kinds of progress that we want to see, both 

in IT and in quality. 

In terms of how our role will evolve over time, we are clearly taking the initiating role leading this forward and our principal focus, 

as I said, is on interoperability, which means to ensure that as we 

put IT tools in place in our doctors and hospitals and other settings 

that they can share information, that we can collect information for 

bioterrorism threats, that we can make sure that consumers can 

get access to their information. Over time, we want to shift our attention toward driving adoption of systems. This effort for interoperability, I think of as a 2-year platform to be able to make sure 

that the next system that is purchased is easier to purchase by a 

physician, is cheaper for them to purchase, and is able to be used 

more effectively in terms of staying up to date. So, our whole role 

will shift as we drive that other component of long-term change. In 

terms of how the standards will play out over time, we do envision 

them having significant Federal support. Starting today, we are 

going to work through a process to let the current voluntary standards efforts move forward, but we have created a new group called 

the AHIC that you mentioned which will receive the testimony of 

these standards developers and, after vetting them, will make recommendations to the government about what those final standards 

should be. We will then turn them over to the National Institute 

for Standards and Technology (NIST) that will go through a process that will make those standards mandatory for Federal agencies. 

This is a very, very expensive change, tens of billions of dollars 

of change just in Federal systems alone to comply with standards, 

let alone the private sector. So, naturally, it will be a long-term, 

incremental change. As that happens, that will then become a necessity of doing business with those agencies is to comply with 

those standards, as well. So, we are going to drive voluntary adoption with a follow-up in terms of how agencies adopt those, as well. 

Chairman JOHNSON. Thank you. That is very interesting. I am 

going to turn to Mr. Stark, and then at the end, if there haven’t 

been question about your new RFPs, I would like to come back to 

that. Mr. Stark? 

Mr. STARK. Doctor, you have mentioned several times using 

government purchasing power to drive results, kind of a free market approach, right? 

Dr. BRAILER. I think. 

15 

Mr. STARK. Why does the administration then object to using its 

purchasing power to lower pharmaceutical costs for the taxpayers? 

Dr. BRAILER. Congressman, I appreciate the question, but I 

really am here to talk about health IT and I can’t speak to that. 

I would be happy to take that question back—— 

Mr. STARK. Well, let me ask you, then, as a physician, or as a 

proponent of the free—you tell us you know something about the 

free market. I would like to find out what you know. Why wouldn’t 

it make sense to you, as an expert in the free market, that using 

the purchasing power of $400 to $600 billion would be more efficient in saving money than cutting it up into a couple of $20 billion 

purchasing powers? 

Dr. BRAILER. Congressman, I respect the question, but I am 

here today as a representative of the administration and not as a 

private expert, so—— 

Mr. STARK. It is the administration that isn’t using its purchasing power to save pharmaceuticals, and if we don’t save any 

money in pharmaceuticals, we aren’t going to have any money left 

to pay the doctors. It is all in one box, Doctor. 

Chairman JOHNSON. Will the gentleman yield? 

Mr. STARK. Yes. 

Chairman JOHNSON. The structure of the Medicare Modernization Act involved people competing to provide pharmaceuticals—— 

Mr. STARK. That is what he is talking about. 

Chairman JOHNSON. Competition—that is right, and that is the 

structure of the bill that was structured, the Democrat bill, also, 

until the final motion to recommit. Both bills were structured to 

have competing PBMs on the theory that competition drove prices 

down, and then there is a special way of trying to drive prices 

down in part B drugs. So—— 

Mr. STARK. I am with you. 

Chairman JOHNSON. That isn’t a topic of this hearing, so—— 

Mr. STARK. It is a topic, Madam Chair—— 

Chairman JOHNSON. Maybe you would like to go on to your—— 

Mr. STARK. Madam Chair, when it is convenient, when you are 

not getting paid big campaign contributions by the pharmaceutical 

industry, it is convenient not to let the government drive prices 

down. I suspect that that would be the—— 

Chairman JOHNSON. I guess what I am getting at is there is 

a dispute between how you drive them down, whether you drive 

them through competition or through government negotiation, and 

that is a big dispute, but that is not the topic we are here—— 

Mr. STARK. If the Doctor doesn’t think it is good and you don’t 

think it is good for driving pharmaceutical prices down, how—now, 

it may be that you haven’t gotten any campaign contributions yet 

from the IT industry and then you might decide that it, too, is a 

good idea not to let us use the purchasing power to drive their 

prices down. The fact is that the drug bill was written by the pharmaceutical industry and has it in it a prohibition—— 

Chairman JOHNSON. Mr. Stark, I truly find that demeaning—— 

Mr. STARK. You are interrupting—— 

Chairman JOHNSON. If you would please—— 

16 

Mr. STARK. Regular order. If you would like to ask me to yield, 

I might, but it is my time and I would like to finish and suggest 

that the reason that this good witness wants to talk about using 

purchasing power is because it hasn’t occurred to them yet that the 

IT industry will be in making big contributions. I think that this 

idea of voluntary standards, we are now somewhere around 17th 

in the world in health care and the Doctor mentioned that we have 

standards in other countries and none of them are voluntary in 

those countries that have better medical care than we do. So, it appears, Doctor, that your idea of having a market-based system as 

a stop to the industry that supports politicians so generously, and 

not having any regulations is a matter of faith with you, is that 

correct? 

Dr. BRAILER. Well, I certainly do have faith in the private market, sir. 

Mr. STARK. That is obvious. 

Dr. BRAILER. I believe that in this case, the private market is 

both being inhibited by government policies around how we reimburse for care—— 

Mr. STARK. Okay. 

Dr. BRAILER. On the other hand, this is one instance where I 

believe—— 

Mr. STARK. Would you suggest we do that with the Food and 

Drug Administration (FDA), then, Doctor? How about having a 

market-based non-regulatory pharmaceutical approval system? 

Dr. BRAILER. I certainly couldn’t comment on that. But I would 

like to tell you that I believe that—— 

Mr. STARK. Doctor, what do you know about? You went to medical school, didn’t you? 

Dr. BRAILER. I did. 

Mr. STARK. Did you get a Ph.D. someplace? 

Dr. BRAILER. I did. 

Mr. STARK. In what? 

Dr. BRAILER. In economics. 

Mr. STARK. You can’t comment on what the FDA does in 

terms—are you familiar with the FDA? 

Dr. BRAILER. Sure, and I would be happy to report to Secretary 

Leavitt and to the White House your interest in the topic and have 

them come back and speak with you. It is not the topic that I have 

come for—— 

Mr. STARK. I am sorry. Thank you, Madam Chair. 

Dr. BRAILER. Could I speak to the Congressman’s question, 

please, Chairwoman? 

Chairman JOHNSON. Pardon? 

Dr. BRAILER. Could I speak to his question? 

Mr. STARK. My time has expired. 

Chairman JOHNSON. His time has expired. Let me go now to 

Mr. McCrery. 

Mr. MCCRERY. Thank you, Madam Chair. Dr. Brailer, welcome. 

Dr. BRAILER. Thank you. 

Mr. MCCRERY. It is nice to have you with us, particularly one 

of your education and expertise. I don’t want to belabor Mr. Stark’s 

line of questioning, but I think it is worth pointing out, and perhaps you as an economist understand what the Congressional 

17 

Budget Office (CBO) understood and wrote in response to a specific 

question about the value of having the government directly negotiate prices with pharmaceutical companies. The CBO and their 

economists concluded that there would be no significant savings to 

the program if the government were to be allowed to directly negotiate prices as compared with the formula that we did include and 

pass in the legislation which calls for very aggressive negotiations 

among plans and providers. So, as an economist, do you understand that the CBO concluded that the market will work just about 

as well as the heavy hand of the government dictating prices, basically, because of their purchasing power? 

Dr. BRAILER. Yes, sir, I am aware of that. 

Mr. MCCRERY. Okay. Mr. Stark in his opening remarks did 

bring up, I think, a useful point that we ought to discuss and explore. In his opening remarks, he suggested that we utilize the existing framework that the VA uses for its IT and get that spread 

out as the template for the private sector. That may be a good idea 

that Mr. Stark has suggested, and I think, actually, CMS announced last week, or maybe—yes, I think last week—— 

Dr. BRAILER. Right. 

Mr. MCCRERY. That they intended to do something like that. 

When Dr. McClellan was here last week, I asked him, and I am 

going to ask you, in light of your RFPs, which seem to call for private sector involvement in developing standards of interoperability, 

are we going too fast with putting out a system that is used by the 

VA and it may not be the best system for our entire health care 

system? How do you plan, how do you envision dovetailing what 

may be a worthwhile effort in getting that system out there, as Mr. 

Stark has suggested, but also developing through the private sector 

what may be an even better system? 

Dr. BRAILER. Sure. Well, I appreciate your interest and Congressman Stark’s interest in VISTA. We have been working very 

closely with CMS and with the Department of Veterans’ Affairs 

since I came to the government to make sure that VISTA can be 

available to the market and the release that is coming next week 

is really an important milestone for us. We intend to make sure 

that that product that is made available is one of many choices 

that physicians have, and I think it will find particular resonance 

in physicians that work in safety net clinics and underserved clinics and clinics in other areas where they have significant technology barriers. Also, I think it does play a role in promoting competition, particularly in small physician offices. We have seen that 

the price performance of EHRs becomes very difficult for physicians 

to get access to in small practices, and that probably is where the 

VISTA system will have its best resonance. 

We are going through a process now of having a certification 

process for EHRs, meaning they will be subjected to inspections, 

and we expect for the VISTA office product to be going through 

that same process to ensure that it can comply with the standards 

that are out as well as, hopefully, be a leader in that process for 

the rest of the market. So, I am very optimistic about what it 

brings, but it is one of a large portfolio of other choices that we 

think physicians will make as they pick products and software that 

18 

meet their own clinical specialty needs, their own practice setting 

needs, and their own kind of patient care needs. 

Mr. MCCRERY. So, you don’t see necessarily getting the VISTA 

system out there, the software out there, as necessarily deciding by 

that that that is going to be the platform forevermore. 

Dr. BRAILER. Absolutely not. I think at this point, the market 

is not supply limited. It is demand limited. The principal factor 

isn’t that there aren’t good products available. The principal factor 

is physicians have no incentive to put them in and they have significant technical business and human factors, barriers, to doing 

that, and I think the VISTA system suffers from the same challenge that any other EHR product does. How does the physician actually implement it and get it up and running? How do they 

change the way they make decisions and communicate? That 

human change, that transformation is really what all of these software products are about and none of them have a magic capacity 

to skip past those. So, I think it is a good solution. It will be really 

a good solution for particular product or particular practice settings. I don’t think it is transformative in terms of how we regard 

health IT adoption. 

Mr. MCCRERY. Thank you very much. 

Dr. BRAILER. Thank you. 

Chairman JOHNSON. Mr. Thompson? 

Mr. THOMPSON. Thank you, Madam Chair. Doctor, thanks for 

being here today. To pick up on the last point that you made, you 

had mentioned that incentives to be a good way to bring about 

these changes. Do you see at any time where we would maybe 

leave the carrot and go to the stick and rely on penalties, or maybe 

a combination, to bring this about? 

Dr. BRAILER. I think that is a very good question. I believe that 

before we will come to that debate, the market itself will come to 

the conclusion that physicians must use EHRs in their practice, 

and not just any EHR, but ones that can actually deliver safer, better quality care. We have seen reports recently in the literature 

that some products, some systems, particularly older ones, don’t 

have the kinds of prompts and reminders and could actually increase the rate of errors. 

Mr. THOMPSON. What happens to providers who are ahead of 

the curve? I have one in my district in particular that has been 

doing IT for quite some time now and I am concerned, as I am sure 

they are, that if, as we start moving in this direction, they may end 

up being penalized or be caught in the position where they have 

invested in one type of equipment and have to switch and do something else. Have you given that any consideration? 

Dr. BRAILER. Oh, a great deal of thought. This is a market that 

is 30 years old. The first EHRs were put into place by the most innovative health care systems in the mid-1970s and we have now 

seen most of the drivers of this have been really large 

innovators—— 

Mr. THOMPSON. Is there some way to protect these folks 

from—— 

Dr. BRAILER. Well, I think, first of all—— 

Mr. THOMPSON. They are kind of being punished for doing 

what you want them to do. 

19 

Dr. BRAILER. Well, I think there is clearly a risk that they 

could be in the position of having systems that are not compatible 

with the future standard, and the Federal Government is line with 

the systems we have in place for care. I think that is one of the 

reasons that we want to see this be an incremental change that 

happens over time to make sure that there is not a significant risk 

that one day, they are—— 

Mr. THOMPSON. Well, I would hope that we could continue to 

talk about this—— 

Dr. BRAILER. Very much. It is a very important topic. It is a 

principle in our concern. 

Mr. THOMPSON. In your testimony, you mentioned that this 

could bring about some pretty substantial savings. I think you said 

about 8 percent to about 30 percent of health care costs? 

Dr. BRAILER. Yes. There are estimates that frame the range of 

savings between ten and—— 

Mr. THOMPSON. What kind of dollars are you talking about? 

Dr. BRAILER. I am sorry? 

Mr. THOMPSON. What kind of dollars are you talking about? 

Dr. BRAILER. I think the general ranges that have been esti- mated for those are $150 billion up to $350 billion dollars. 

Mr. THOMPSON. The CBO agrees with that? 

Dr. BRAILER. I don’t think CBO has actually issued their own 

estimates, and we have even cited—these estimates are cited from 

others in the scientific/academic literature—— 

Mr. THOMPSON. Who is the benefactor of the savings, the provider or the payer? 

Dr. BRAILER. Well, I think the patient is the ultimate benefactor because it is their lives that are saved. It is ultimately 

money that comes out of wage offsets that goes into health care—— 

Mr. THOMPSON. There will be some kind of provisions to ensure that that savings is, in fact, passed on? 

Dr. BRAILER. Well, I think that is a principal question. Most of 

the research says that the short-term accrual of the benefits go to 

payers, those at financial risk, and so that is a question that has 

really dogged the industry to some degree at this point. 

Mr. THOMPSON. Then you also mention in your testimony 

about the work that you have done looking at how other countries 

have dealt with this issue. I think you specifically mentioned Canada, the Netherlands, Japan, Australia, Great Britain, and France. 

It strikes me that there is a considerable difference between their 

systems of health care and ours, specifically they are either national health care system or single-pay. Given the difference, were 

you able to learn from your observations there? 

Dr. BRAILER. Yes, I think very much. First, it helps us recognize that this is a global phenomenon and it is not simply something that is happening in this country. While it is certainly difficult for us to learn about the kinds of incentives, the mechanisms 

for financing, the care and accountabilities, because they are so peculiar to each country, the architecture, the design of security, the 

way the systems are developed and integrated, we have learned a 

great deal from, and we are watching other countries who are 

ahead of us. So, certainly, a lot about technology, and I think we 

will learn also a lot about how to deal with large-scale data assessVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 E:\HR\OC\26387.XXX 26387
20 

ment research, monitoring of care status from these countries, as 

well, because they are further ahead than we are today. 

Mr. THOMPSON. Thank you. I will yield back, Madam Chair. 

Chairman JOHNSON. Thank you. Mr. Ramstad? 

Mr. RAMSTAD. Thank you, Madam Chair. Thank you, Dr. 

Brailer. Like you, Dr. Brailer, I believe that health IT can save 

lives and improve health care, increase efficiency, and actually reduce costs in our health care system, and I want to focus on that 

in my line of questioning. I think all of us agree that it is totally 

unacceptable, totally outrageous that as many as 98,000 Americans, according to your testimony, Dr. Brailer, die each year because of medical errors. Almost 100,000 people in this country die 

because of medical errors each year. Unlike my good friend from 

California, the ranking member, and he is a good friend, and believe it or not, he is a good guy, your testimony is very illuminating, I believe, and your recommendations for reform are impressive. I read your testimony, also believe it or not. I did read 

your testimony and you state therein that health care fraud accounts for 3 percent of health care expenditures, total expenditures 

each year, which equates to $56 billion, almost $57 billion in fraudulent claims alone. When you include improper claims, again, according to your testimony, with fraudulent claims, improper claims 

plus fraudulent claims, that is 10 percent of the money we are 

spending in this country each year on health expenditures, or $170 

billion in fraud and improper claims. So, three is no question that 

we have got to reduce those costs, and my question, my main question is this, Dr. Brailer. In your judgment, how significantly can we 

reduce the costs of fraudulent claims and improper claims by using 

automatic, or automated, rather, automated coding software and a 

national Health IT Infrastructure? 

Dr. BRAILER. It is a great question and it is interesting to note 

that different views have been expressed. There is certainly a minority view that says that, in fact, EHRs will increase the rate of 

fraud. The overwhelming view tends to be that EHRs will allow us 

to save and reduce fraud. In fact, we have a product going on today 

and one of the witnesses from HIMA, Ms. Kloss, will be happy to 

tell you about their role in that. But we are trying to estimate exactly what those savings are. The key shift that we are trying to 

drive is to go from fraud prosecution, which is way out after the 

fact, a very high opportunity cost for the government and the providers, to move toward real-time fraud prevention, so the provider 

there knows whenever they are making a decision on an EHR what 

the expectations are for documentation, what the expectations are 

by law so they can determine there and sign that they have complied with that. We think that is going to be a fundamental shift 

toward new cyber fraud prevention capabilities over the next few 

years. 

Mr. RAMSTAD. Did I understand you correctly the first part of 

your response? There is empirical data to suggest it will cost instead of save money? 

Dr. BRAILER. I am just indicating that there are those who believe. There is concern in the law enforcement industry that these 

electronic tools could increase the rate of fraud, but it is a minority 

view. So, we are taking that project on to estimate what the real 

21 

economics of fraud are as a result of IT adoption, but at the same 

time, developing these new state-of-the-art cyber fraud prevention 

techniques. 

Mr. RAMSTAD. As I understand it, Dr. Brailer, my question will 

be answered by the results of that study, is that correct? 

Dr. BRAILER. That is correct. 

Mr. RAMSTAD. That is ongoing? 

Dr. BRAILER. That is going on today. 

Mr. RAMSTAD. When will that be completed? 

Dr. BRAILER. The first phase of that will be done by early 

spring of 2006 and we will work on a follow-on for various other 

demonstrations. 

Mr. RAMSTAD. Well, I don’t think the American taxpayers or 

the American health consumers can wait much longer, so if you can 

do anything to expedite that—— 

Dr. BRAILER. I agree. That is one of the reasons we made it one 

of our top priorities in the first year, was to define that. 

Mr. RAMSTAD. Again, that is encouraging and I thank you. Let 

me ask, finally, with the few seconds I have, what, in your judgment, are the biggest barriers to implementing IT in health care? 

What are the biggest barriers? We know there are multiple barriers, but what is the largest obstacle we face? 

Dr. BRAILER. The largest two obstacles are perverse incentives. 

There is not a business case for the typical physician, office, or hospital in doing this. The benefits accrue elsewhere and it is a substantial cost. Second, we don’t have the standards or the infrastructure for systems to become compliant with the kinds of information 

sharing that we want to do. That stops most people from buying 

these systems and it makes their implementation very risky and 

very difficult, and that is where we are focusing most of our effort 

today. Thank you. 

Mr. RAMSTAD. Thank you very much, Dr. Brailer, for your testimony. I yield back. 

Chairman JOHNSON. Thank you. Mr. Emanuel? 

Mr. EMANUEL. Doctor, thank you for your testimony. One of 

the things—you know, in the United States, some of the report indicate that we spend about 34 cents out of every health care dollar 

in kind of moving paper back and forth—insurance, hospitals, doctors, patients, and so forth. Other major industrialized nations 

range on the high end of 24, on the low end, 18 cents of every 

health care dollar. The one promising area would be this area. I 

think one of the things that we should set as a goal over the next 

10 years to get us into that middle range where Canada, England, 

France, Germany, and Japan have made advances, this is the one 

place that you can get low-lying fruit and find the real savings in 

health care and apply it in other areas, for uninsured, other types 

of coverage that you want to do or cost containment areas. My concern, though, with allowing the private sector to set the rules is— 

and I said this when we met as a Committee on a bipartisan fashion, although I generally believe that this is a great area to proceed—is, A, if you look at what happened in the wireless space and 

with the telephone without any direction from the government, we 

have so many different competing platforms and models out there 

that, in fact, our telephone space, wireless space, compared to 

22 

where Europe is and individual countries, is not as strong from an 

infrastructure. 

My fear is that if we allow the private sector to take a lead without setting some of the boundaries and programmatic goals for it, 

even though some would advocate that is the heavy hand of government, I am willing to give them the right to develop, but setting 

the ground rules, a lot of that synergy and a lot of that cost savings 

that you want to see would actually get lost and we would not see 

the full potential. And, in fact, in many ways, whether you want 

to talk about it as my colleague from Minnesota did as preventing 

fraud, or you want to see it purely from a cost saving standing, we 

would literally be leaving money on the table because it would not 

be developed in the most coherent, organized fashion. I don’t think 

the government has to be the one that develops it, but it surely can 

set some of the ground rules to ensure that we are not leaving 

money on the table. I do think that there is a—we did this once. 

We did it in the wireless space and it is not the most efficient. Although we all like to applaud the private sector as a total model, 

I will say one thing in defense of the ranking member. The private 

sector does negotiate for wholesale prices. That is what Sam’s Club 

is about. When you buy bulk, you save. I don’t care what CBO 

says. So, in this case, my worry is that we are going to leave money 

on the table and not do it in the most efficient way. It can be developed by the private sector. The rules, the goals, and the boundary, 

that is what the government does, because there is so much here 

at national risk, which is a huge amount of money we overspend 

in this country on health care for what we could get for our dollar. 

Dr. BRAILER. Well, I appreciate the concern and I think you 

have really put your frame around this paradox that exists, which 

is we want to, on the one hand, have uniform and widespread 

adoption of standards, and on the other hand, we want them to be 

progressive and stay current and modern over time. The reason 

that we have not taken a regulatory view of this is because we can 

achieve one, but at the cost of the flexibility over time. The approach we are taking is to develop these by contract with the private sector under the supervision of our office and then turn those 

over to a Federal advisory Committee called the AHIC, which 

would then turn them into a Federal process. The hope is, and this 

is where I think it is worth a discussion, is would the buying power 

of the Federal Government allow us to preserve the flexibility or 

the innovation over time yet have the force of mandate? We think 

it will, given our huge clout in the health care market, and we have 

agreed that we are going to use the mandatory internal process to 

make sure that these standards do become required for agencies. 

Mr. EMANUEL. If you—— 

Dr. BRAILER. So, hopefully, we can have both. I am sorry. 

Mr. EMANUEL. No, no, that is okay. There is more of a discussion. In my view, though, if you have competing platforms being 

developed, what will happen is we will find savings, because clearly, when you are paying 34 cents when other countries are paying 

25 cents, you are going to find savings. 

Dr. BRAILER. Right. 

Mr. EMANUEL. The question is, will you accomplish all that you 

can, and I am not saying the government has to develop it. We 

23 

know this space and given technology moves way too fast for the 

government’s capacity to be the developer. But without setting 

what our objectives are and what the platform should look like, in 

fact, we are going to be leaving a lot of money on the table and 

have actually wasted time and money—— 

Dr. BRAILER. Right. 

Mr. EMANUEL. Rather than really realizing all the potential 

that exists here in the medical IT space. 

Dr. BRAILER. Right. This is why the work of our certification 

commission will be very important, because we are requiring them 

to specify potentially hundreds of parameters and what health IT 

must look like, operate like, store information like, and what standards it uses, and we will then link Federal purchasing, conditions 

of participation, other things in the future to complying with that. 

Mr. EMANUEL. Madam Chair, may I ask one more question, 

just as an example? 

Chairman JOHNSON. We will have a second round of questions, 

because there are others that—— 

Mr. EMANUEL. I don’t know, given my memory today, whether 

I will remember it. That is okay. 

Chairman JOHNSON. Mr. Hulshof? 

Mr. HULSHOF. Thank you, Madam Chairman. Good morning, 

Dr. Brailer. The word ‘‘harmonization’’ was used earlier this morning in this hearing, and I guess harmonization can have a variety 

of different contexts. It could be musical performance. It could be 

mathematics and wavelengths, as was cited. Obviously, it is very 

important for this subject of IT. Unfortunately, the word ‘‘harmonization’’ doesn’t always describe the political discourse around IT. I 

am encouraged, as most are, I think, about—and Mr. Emanuel 

even touched on just the extraordinary opportunities through medical devices, through electronic records, I mean, we are just riding 

on the tip of the iceberg, I think, of some extraordinary positive 

changes in health care. Having said that, let me make a plug. You 

mentioned your home State of California. Let me extend kudos to 

another gentleman from California on this Committee, Mr. Thompson. Mr. Thompson and I have introduced a bill related to telehealth, and while I know that is not the particular subject of today’s hearing, let me put in a commercial message on behalf of 

Mike and myself because we really see that if we are serious about 

patient care, the quality of a patient’s care should not be determined by one’s geographic location. 

An example at the University of Missouri Medical School has 43 

sites scattered throughout the State and what our bill attempts to 

do, H.R. 2807, is to incorporate other disciplines, and we are trying 

to deal with some of the same things as far as cross-boundary regulations and what have you. So, I just put that on your radar screen 

as we talk about this larger issue, as we really hone it down to the 

underserved areas, especially not just in the rural areas, which is 

often used in that context, but even in urban settings, as well, 

where tele-health could really, I think, be on the cutting edge. You 

mentioned with Mr. Emanuel a little bit about transitioning, not 

only the government being a payer and provider, but how you envision transitioning to the private sector and somewhat of the ongoing role of the Federal Government in this entity. Let me even back 

24 

up a step, because as you know, the Medicare Modernization Act, 

we did take an important first step, in my view, toward this interoperable health information system through our Commission on 

Systemic Interoperability, and we are going to hopefully get that 

report, I think, in October. How will that work if that commission 

then transitions into the work of the AHIC? Can you give us some 

thoughts on that? 

Dr. BRAILER. Sure. We expressly are preparing for the reports 

from the Commission on Systemic Interoperability to be handed to 

the AHIC so they can review them from a perspective of implementation. How do they accomplish the recommendations that the CSI 

made? Further, Secretary Leavitt has asked the Commission to develop a consumer vision. What does this really mean to America’s 

consumers if we had health IT to ensure that the AHIC is guided 

by that vision? So, there is a very important handshake between 

the two and we are actively involved with both as they sunset or 

start up. 

Mr. HULSHOF. I appreciate that. Madam Chair, I yield back my 

time. 

Chairman JOHNSON. Thank you, Mr. Hulshof. Mr. Camp? 

Mr. CAMP. Thank you, Madam Chairman. I am interested, as 

well, in this interplay between the AHIC, this community, and the 

Commission in the Medicare Modernization Act. I appreciate your 

service and certainly your credentials and training. In your testimony, you mentioned that the government would act as a leader 

and a catalyst and convener of ideas and information regarding the 

Nation’s health IT, and then also that the private sector is key as 

the public will be the purchasers of this. I think it has been important to know that when we have seen government grapple with 

technology, particularly in the fuel-efficient car area, command and 

control choice of electric cars has ended up not being the direction 

that the technology went, primarily because consumers didn’t purchase them. So, I think it is very important to have this private 

sector role, but again, having sort of begun this process in the 

Medicare Modernization Act, I would like to hear your thoughts on 

proceeding forward and sort of the time line that you see this taking in the months ahead. 

Dr. BRAILER. Sure. I appreciate that very much. We intend to 

have the AHIC seated in September. This group will meet several 

times per year, and the first thing they are going to do is prioritize 

certain breakthroughs where we think health IT can have a shortterm impact. One of the ones that we will certainly do is e-prescribing. Because of the Medicare Modernization Act (MMA) (P.L. 

108–173), it is already underway. Second, I am sure that we will 

deal with adverse drug event reporting. This is a necessary component of information collection to make Americans safer as a result 

of drugs that are on the market. Others will be prioritized by the 

AHIC Commissioners so we know where to focus our energy, on 

real things that people can see soon. We will then form work 

groups that are supported by our contractors to develop recommendations, and one of the real constraints in this process is 

even if today we wanted to mandate or require something, we don’t 

know what to do. We don’t have the standards agreed to or the certification criteria. So, we are going to work through that and make 

25 

determinations of what should be done. Then the AHIC will then 

focus on how do we get it done, how to use purchasing power, how 

to align our interests with Federal agencies and private sector organizations. So, the prioritization will occur by early 2006. The 

breakthroughs will be managed on a yearly basis and we expect to 

see them happen over the course of a two-year period. Two-thousand-seven is where we have set the outside date for the first five 

breakthroughs to be seen visibly by the American public, and the 

rest will follow from there. We really focus on this two-year time 

horizon to have very urgent things done. 

Mr. CAMP. Thank you. Thank you, Madam Chairman. 

Chairman JOHNSON. Thank you very much. Mr. Stark, is Mr. 

Doggett—— 

Mr. STARK. No, he is not returning. 

Chairman JOHNSON. He is not returning? Mr. McCrery had a 

follow-on question. 

Mr. MCCRERY. Thank you, Madam Chair. Dr. Brailer, you have 

said a couple of times today that there are just too many impediments to doctors, for example, purchasing this kind of technology 

for their offices. I just want to share with you an experience I had 

recently in my hometown of Shreveport, Louisiana. I had the opportunity to go visit a small group practice in Shreveport of family 

physicians, I think there are 11 physicians in the group, and they 

have, in fact, on their own purchased IT and it is in use currently 

throughout their office, throughout their practice. The doctors have 

laptops that they can take with them when they are off. They have 

found it to be extremely useful in terms of providing safer, higher 

quality care to their patients, and that is why they invested in the 

technology. It makes them much more efficient. It makes them 

much more productive during the day. And because of the many 

elements of the technology that provide them information instantaneously, they feel much better when they prescribe a medication, 

for example, for one of their patients, because it immediately comes 

up on the screen, the other medications that that patient is taking, 

any dangers inherent in the different medications being prescribed. 

It is all right there. So, how do you reconcile that experience of 

mine with a relatively small group practice in Shreveport, Louisiana, having made that investment on their own—they are paying for it out of their pocket—with your conclusion that there are 

too many impediments, not the least of which is cost, to the general 

health care community? 

Dr. BRAILER. Well, I think there are two observations that that 

example brings through. First is the overwhelming power of why 

this is inevitable, why physicians using EHRs that can do the 

things to not only make their patients safer, but to liberate their 

own professional lives is inevitable. I remember that interns in 

practice today, interns that started residency, were born the same 

year the IBM personal computer came out. We should see more of 

that. That is one of the reasons that in answer to the question 

about how do we make sure that this is ultimately done, I think 

professional standards and the discipline of physicians will make 

this done because of the power of that. Now, on the flip side, those 

experiences are not that old. Most of the recent adoption that we 

see really is quite recent, in a couple or 3 years. So, it is really just 

26 

now that the industry is digesting that and saying, wow, this really 

works. This is something that can really be a huge benefit, and 

that is one of the reasons that we see substantial increases. I 

would come back to this caveat. Eleven physicians is a large practice in the spectrum of physicians. It seems small as we view it, 

but that is well above the 50th percentile of size of practice. The 

real critical challenge are physicians between one and five physicians in practice that make up about 38 percent of our care delivery, and those are the ones that don’t have the resources. They look 

at an 11-physician group as a big group with lots of resources and 

a lot of help. So, everything is relative in this sense. I think the 

100-physician groups will do fine. The 50-physician groups will do 

fine. The 10 to 50, some will do it, as you have observed, and some 

may not, and it is going to require some help. But below that, it 

is a real challenge, and that is where we have focused most of our 

effort, is how to bring along small physician practices that are 

ultra-small, up to ten physicians, and there, it is quite hard even 

though they could themselves see that same vision. 

Mr. MCCRERY. Thank you. I just want you to consider that as 

you go forward in recommending or potentially recommending incentives that the government should pay for as we go forward in 

this. By the way, the one complaint that this physician group expressed was that their system was not able to communicate with 

the hospitals they dealt with and so forth, so it was somewhat limited in its application. 

Dr. BRAILER. Right. That is the other challenge that we talked 

about, and that really is the opener of clinical value to doctors. 

Mr. MCCRERY. Thank you. 

Chairman JOHNSON. Mr. Stark has a follow-on question. 

Mr. STARK. Dr. Brailer, earlier, you mentioned to me that you 

thought HIPAA was an unmitigated disaster, but I have to find out 

if that is the administration position or not. The administration 

has repeatedly said that HIPAA is a floor. Most notably two or 3 

years ago, you chose not to adopt strong standards for protecting 

HIV/AIDS information and also eliminated the requirement for patient consent to use or disclose identifiable information. The administration used this argument again, that HIPAA was a floor, to reassure consumers that States would be able to address these personal and sensitive issues by providing a higher standard. Others 

today, other witnesses today will testify that the HIPAA standards 

are more than adequate to address the concerns of consumers and 

that HIPAA should be a ceiling, or put another way, the only protection we have for the privacy of our records. So, my question to 

you is, what is it? Is HIPAA a floor or is it a ceiling? 

Dr. BRAILER. I think that is a critical question and I appreciate 

it. First, I want to comment that HIPAA really, as you know, is two 

pieces. It is the privacy and security components, but it is also the 

transactional standards component. The discussion about standards, I think is one that we have watched very closely, that the 

standards that are now ensconced in HIPAA for those transactions 

are quite old. They were old when they began the debate and they 

are locked. It is very difficult to change those and even to fix errors 

in those standards, let alone to bring them up to date with current, 

modern thinking, modern as of 1980s thinking. So, this is one of 

27 

the lessons that we have watched, about how do we allow for organic evolution of standards as determined by professional and scientific bodies, yet have the rule of law, and this is a challenge that 

I think we all grapple with. Now, turning to the privacy questions, 

I think there is a part of HIPAA that we have focused on a great 

deal which is not actually the State variation, the State, if you 

would, rules that could go beyond HIPAA, suggesting that it is a 

floor, but it is that HIPAA allowed enterprise-level, doctor-level, 

hospital-level flexibility with respect to privacy and security rules. 

That means that that flexibility, which meant that Kaiser in your 

district, for example, would want to have a higher level of privacy 

and security because it is a cyber target and it is much larger of 

a risk than a one- or two-physician practice who couldn’t afford 

that, perhaps. That was the determination. 

What we see is that that variability, that flexibility is a direct 

barrier to interoperability because each organization sets their own 

security and privacy regime, and even if we had standards, even 

if we had architecture and systems that could connect, if you use 

a biometric for your password and I just use just a regular old 

password, I couldn’t get your data if you told me that I could, and 

that is a piece that we are focusing on with one of our projects, 

which is to illuminate recommendations, policy guidance about how 

do we close that enterprise-level variation and at the same time advance the security and privacy protections. I will just give one 

other comment on HIPAA to the spirit of your question. I think 

HIPAA addressed a different paradigm than the one that we are 

heading toward and I think there is a very interesting debate about 

HIPAA. I think, though, there is a separate debate that is beginning around portability of information. The HIPAA was designed in 

a world that was manually controlled and paper-based for clinical 

information, and as we move toward data that is electronic and 

flows around health care, disclosure controls are just one part of 

that dialog and there are many other pieces. We are trying to map 

out, what are the right questions to ask about the privacy regime 

that we would use in a highly portable, highly electronic, automated world of health information exchange? I don’t have the answers. I am trying to get the questions assembled, because we want 

to make sure that health IT is not one example of where science 

and innovation goes far ahead of social discourse, and that is where 

we are focused today and that is one of my principal, principal priorities as I come to work every day. Thank you. 

Mr. STARK. Is your understanding that the administration’s position is that HIPAA is a floor or a ceiling? 

Dr. BRAILER. Well, I think, definitionally, HIPAA is a floor because of the state of variability and the enterprise variability. The 

HIPAA sets a minimum that is set. In terms of where it should be, 

that is a separate question and I—— 

Mr. STARK. Is it your opinion that it should remain that, allowing this enterprise flexibility and State flexibility? 

Dr. BRAILER. I—— 

Mr. STARK. I think that is what you just testified. You—— 

Dr. BRAILER. Yes. 

Mr. STARK. As to the enterprise flexibility—— 

28 

Dr. BRAILER. I will speak to your question, because it is one 

that I am very worried about. The challenge here is how do we 

adapt security and privacy regimes that could fit in a 3,000-physician organization and one in a two-physician organization. I am not 

talking about what we should do, but I am talking, practically, 

what could be done with the resources and people and systems they 

have. I think flexibility, therefore, has inherently got to be part of 

this, because we can’t impose multi-million-dollar costs on a small 

practice in the name of a security regime that results largely from 

an entity being at higher risk than a small practice. On the flip 

side, I think we can create interoperability in the kinds of security 

protections by creating some new kinds of modern protections, like 

trust brokers or a chain of trust managers who can actually navigate these transactions between different security regimes, at the 

same time, protecting them. It has been used in other industries. 

Banking, credit cards, and so forth, use this routinely. We are just 

exploring it in health care today, and I mean ‘‘we’’ meaning the industry. In the administration, we are watching it. In the private 

sector, there is some experimentation. Some policy groups, like 

Connecting for Health and others that I know you have heard from 

here, have looked at this. It is the question of the day about how 

far we can go into really modern technology innovations to protect 

innovation in health care and what that means in terms of the 

huge variability of types of organizations and practice settings. 

Mr. STARK. Thank you. 

Chairman JOHNSON. Thank you, Dr. Brailer. That is a very important question and will receive a lot of attention throughout the 

rest of the panel and I appreciate your thoughts on it. Thank you 

for being with us. 

Dr. BRAILER. Thank you both very much. 

Chairman JOHNSON. Thank you. The next panel will come forward. As is customary, we will hear each of the five panelists. You 

have 5 minutes, but your entire statement will be submitted for the 

record, and then we will proceed with questions. Good afternoon. 

Dr. Detmer, would you proceed? 

STATEMENT OF DON E. DETMER, M.D., PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, AMERICAN MEDICAL INFORMATICS 

ASSOCIATION 

Dr. DETMER. Good morning, Chairman Johnson, Ranking Member Stark, members of the Subcommittee. I am Dr. Don Detmer, 

President and Chief Executive Officer of the AMIA, whose 3,200 

members include physicians, nurses, computer and information scientists and managers, biomedical engineers, academic researchers, 

and educators. Over the years, AMIA has provided many of the 

thought leaders who have pioneered the innovative use of information technologies in health care. As you mentioned in the introduction, I am a member of the Commission on Systemic Interoperability and a former Chair of the NCVHS. It is good to be back in 

front of the Health Subcommittee. My written testimony covers five 

major points, and I will summarize three of them now. First, the 

Office of the National Coordinator for Health Information. Dr. 

Brailer and his office have done an excellent job with very limited 

resources. Examples are the strategic framework and the recent 

29 

RFPs, including State privacy and business approaches, but others 

come to mind, as well. His office needs to be established in statute 

and also given adequate funding. I also believe that the NCVHS as 

a senior health information advisory Committee will be a very valuable resource and sounding board and partner for him and Secretary Leavitt as the AHIC moves forward. 

The HIPAA—we have survived the formulation and early implementation of HIPAA. An evaluation of this experience is prudent, 

but the evaluation should not take too long and we need to move 

forward following this review. From my perspective, the privacy 

rule has been a success in clarifying the individual rights of all patients in relation to their own health information on a national 

basis and in establishing the responsibilities and legal obligations 

of all providers with whom patients interact. Undoubtedly, it has 

put privacy in the face of all patients, including some who may be 

personally more concerned about the inefficiency that it means and 

want less hassle. Nonetheless, HIPAA has allowed NHII to move 

forward, and I think this is a very big plus. As an unfunded mandate, it hasn’t yet simplified administration, but it has allowed us 

to move forward with the NHII in terms of handling secure personspecific information and setting important standards. However, a 

few big issues remain. Much better funding for clinical standards 

development and maintenance is needed, with the NLM playing a 

big role in this. Without this investment, Federal health information standards will not be sufficiently vetted and developed and 

real problems for the entire system will result. I support this investment, since ultimately, I think we will only get a functional 

interoperable NHII with real Federal health information standards 

in key areas. I mean by that essentially establishing meaningful 

floor-to-ceiling standards that preempt idiosyncratic State and 

business approaches. 

States, in my view, cannot effectively regulate the Internet, and 

I don’t feel they can realistically regulate the information highway 

for health information. Only Federal leadership can develop this. 

This is a clear message from international evidence to date and we 

would do well to seek global collaboration on many of these standards. The NLM can help with this, too, and so, too, can ARC and 

others. Financing—financing health IT software, hardware, training, and the backbone for the networking dimension is a complicated matter. The Federal Government must play its role in this, 

as well. So, too, must all the entities affected, and we need innovative financing to support IT in such a way that we will improve access, safety, quality, greater patient involvement, data security, 

and efficiency. At the networking level, Stark and other fraud and 

abuse prohibitions have made some key players, such as hospitals 

and physicians, so totally risk averse that the development and implementation of a functional NHII is being impeded. Those are the 

big points, but I might add that I had the experience of living fourand-a-half of the past 6 years in England at Cambridge where I 

consulted to the National Health Service on its own national program for health IT. If you are interested, I might be able to reflect 

for you on any international dimensions of this important global 

development. You will note that I didn’t stay long enough in East 

30 

England to develop a local accent, and it is awfully nice to be back 

home with all the activity going on now. 

The AMIA wishes to publicly thank you, Chairman Johnson, for 

your outstanding and continuing leadership. Your perseverance has 

really mattered in this crucial arena of health information and 

transformation and national security. Mentioning national security, 

I personally consider the NHII to be as central to national security 

as the Interstate Highway System was considered during the Eisenhower administration. I thank you again for the invitation to 

testify. I look forward to responding to any questions you may 

have. 

Chairman JOHNSON. Thank you very much, Dr. Detmer. Ms. 

Kloss? 

[The prepared statement of Dr. Detmer follows:] 

Statement of Don E. Detmer, M.D., President and Chief Executive Officer, 

American Medical Informatics Association 

Good morning. Chairman Johnson, Ranking Member Stark, members of the 

Health subcommittee: thank you for the opportunity to appear before you today. My 

name is Don Detmer. I am President and CEO of the American Medical Informatics 

Association, whose 3200 members include physicians, nurses, computer and information scientists and managers, biomedical engineers, academic researchers and 

educators. Over the years AMIA has provided many of the thought leaders who 

have pioneered the innovative use of information technologies in healthcare. In addition to my role with AMIA, I am a Professor of Medical Education in the Department of Public Health Sciences at the University of Virginia. 

Having been selected by Speaker Hastert, I currently serve on the Commission 

on Systemic Interoperability, which was created by the Medicare Modernization Act 

and which will make recommendations concerning the adoption and implementation 

of health information technology standards in a report to Congress later this year. 

From 1996 to 1998 I served as Chairman of the National Committee on Vital and 

Health Statistics, whose mission, broadly, is to advise the Department of Health and 

Human Services on shaping a national information strategy to improve the nation’s 

health. My tenure at NCVHS coincided with the expansion of the Committee’s 

charge enacted in the Health Insurance Portability and Accountability Act of 1996, 

which gave the Committee significant responsibilities in regard to administrative 

simplification and privacy. In my role as NCVHS Chairman, I had the pleasure of 

appearing before the Health subcommittee on occasion, and today I would like to 

thank and congratulate the subcommittee for your abiding interest in, and commitment to, the development of health information policies to improve the quality, safety and efficiency of healthcare, while at the same time protecting the security and 

confidentiality of personal health information. 

As you consider the introduction of new legislation relating to health information 

technology and the development of a national health information infrastructure or 

NHII, let me comment today on three important issues: 

• first, there is a critical need for ongoing Federal leadership in encouraging and 

shaping an NHII that benefits all stakeholders, especially patients; 

• second, we should review ‘‘lessons learned’’ from the rollout of HIPAA standards 

to date and identify issues to be considered as additional health information 

standards are developed and disseminated; 

• and, third, we should begin to address current disincentives—both real and perceived—that slow the implementation of health information technologies in our 

healthcare system, the most information-intensive enterprise in our economy. 

The Need for Federal Leadership 

While it is the undoubted world leader in high technology clinical care and biomedical research, the U.S. healthcare system is an incredibly fragmented mix of 

very large and very small players, 21st century medical science mixed with uneven 

access, delivery and outcomes, and cottage-industry business practices. Market 

forces alone have not driven integration of the interests and needs of disparate participants: hospitals—physicians and other providers—payers—employers—researchers—and, most important, patients. And, it is unlikely that they will. As a result, 

too few individuals have access to electronic health record systems and there is little 

31 

interconnectedness of the systems that exist. Further, despite some progress, initiatives to measure and pay for quality have proven difficult to implement. 

Over the last 14 months, the Office of the National Coordinator for Health Information Technology, which is headed by Dr. David Brailer, a Fellow of AMIA’s College of Medical Informatics, has done an excellent job in communicating a vision to 

support widespread adoption of interoperable electronic health records within the 

next 10 years, particularly in consideration of the resources available to it. AMIA 

is particularly pleased that among the four requests for proposals (RFPs) issued recently by the Office (ONCHIT) are contracts for an Internet-based national health 

information network and for the development of processes for the harmonization of 

the various health information standards that are emerging. In regard to interoperability standards and the development of processes to certify health information 

technologies that can actually ‘talk’ to each other and will allow the seamless integration of information systems to facilitate quality care, AMIA is also very supportive of the public-private American Health Information Community (AHIC) announced by Secretary Leavitt just last month. 

We strongly believe that HHS should be given explicit responsibility for ensuring 

the ongoing maintenance and dissemination of health information standards, with 

authorization for licensing and/or other types of support. To give you a successful 

example of Federal leadership, I would point to Secretary Tommy Thompson’s drive 

to complete the licensure and distribution of SNOMED–CT, a very useful ‘dictionary’ of medical terminology, by the National Library of Medicine in 2004. AMIA 

firmly believes that the Department should draw heavily on the resources and expertise of the NLM, and we hope that the AHIC will use the Library’s expertise in 

the maintenance and dissemination of further content standards. 

I understand that the legislation to be introduced soon by Chairman Johnson establishes the Office of the National Coordinator for Health Information Technology 

in statute, and I believe this step is a crucial one in clarifying Federal leadership. 

As part of our support for the Office of the National Coordinator, AMIA urges the 

appropriators on both sides of the Hill to provide for adequate funding of ONCHIT. 

Examining HIPAA Lessons Learned So Far 

As we move—and we will continue to move—to develop an interconnected, interoperable health information system that will facilitate quality, access and patientcenteredness on a national and international basis, it is prudent to identify lessons 

we have learned so far from the administrative simplification provisions of HIPAA. 

Though the road was often difficult, if not actually painful, we have made a great 

deal of progress in establishing the rights of individuals to expect that their health 

information will be used appropriately and their privacy and confidentiality protected, and in imposing meaningful and reasonable obligations on health care providers, plans and payers, and others to comply with consistent Federal standards 

for the use, disclosure and transmission of health information. 

Where once some people in the healthcare system may have treated individual 

health information too cavalierly on at least some occasions, from my perspective 

it is manifestly clear that since the Privacy Rule took effect in 2003, doctors, hospitals, pharmacies, health plans and others have made really extraordinary efforts 

to inform individuals of their rights and to establish policies and procedures that 

protect sensitive health information. Today every individual has a Federal right to 

access his or her medical record and to expect that the healthcare system will keep 

that record secure and confidential. And these norms are national—no longer are 

your rights, or the legal responsibilities of those healthcare providers you deal with, 

defined by the unique features of the State in which you live. Even if HIPAA may 

have ‘backed’ the nation into reasonable privacy and confidentiality protections, the 

roll-out has proved, on the whole, quite successful. 

Notwithstanding what I think have been extremely good faith efforts to ensure 

that personal data is adequately protected, I do not discount that some people—for 

instance, those with concerns about the security of especially sensitive information, 

such as HIV status or relating to mental health treatment—have continued concerns about health privacy. To my knowledge there have not been reports of any 

large-scale violations of the framework set in place by the HIPAA Privacy Rule. 

That is, individually identifiable health information is used and disclosed only for 

‘‘treatment, payment and health care operations’’ or as otherwise specifically authorized by the individual. Does the Privacy Rule protect against patently unethical or 

extraordinarily careless acts—like the leaking of a celebrity’s medical record to a 

tabloid magazine or the disposal of old medical records in a dumpster or a straightforward instance of identity theft? Of course not—but we cannot expect even the 

most carefully crafted information standards to prevent all illegal behavior. In such 

32 

instances, active pursuit and strong penalties are needed when intrusions and misuses are identified, as a lesson to dissuade other from similar illegal behavior. 

Some will argue that the States must have the capacity to enact ‘more stringent’ 

standards for health information—as is true under the Privacy Rule—for all health 

information standards, including those that are absolutely necessary for the development of an interconnected, interoperable national health information system. In 

the name of better healthcare, I must respectfully disagree. About half of all Americans live near State lines and multiple State approaches will most likely preclude 

efficient and seamless transmission of crucial health information. For example, it is 

not unusual at all for an individual to work in the District, live in Maryland, and 

receive health care in Virginia, with payments made by an insurer in any or all of 

these locations. If we are to ensure real-time availability of accurate and complete 

clinical information at the point of care, we simply cannot have the standards for 

the use, disclosure and transmission of the patient’s health information subject to 

idiosyncratic requirements of individual States. Certainly, States do not intervene 

in similar situations, such as in the regulation of ATM use. States may impose varying requirements, like placing limits on allowable service fees, but they do not intrude into the information standards that facilitate the transmission of financial 

data, for example by requiring me to use a 4-digit pin at an ATM in Maryland but 

a 9-element alphanumeric pin at my home ATM in Virginia. In other words, the information exchange standards have been developed and agreed to by the banking 

industry and are national and international in their application. 

I doubt that we can get to the common standards and interoperability that must 

underlie the widespread adoption of electronic health records without Federal preemption of conflicting State laws. But rather than simply assert that proposition, 

let me note that, in relation to the Privacy Rule, since 1999 AMIA has called for 

a study of the impact of the lack of Federal preemption and the impact of varying 

State statutes on the rights and protections afforded to individuals and upon the 

quality, cost and effectiveness of health care. Thus, I am very pleased that the bill 

to be introduced soon by Chairman Johnson calls upon the Secretary to undertake 

such a study in relation to standards that have been adopted subsequent to HIPAA. 

Should the study show that varying State laws and requirements have a negative 

impact on health care delivery, quality and access, and that HIPAA has established 

meaningful privacy and security protections, it makes sense to move forward without delay on Federal preemption for all adopted HIPAA standards. 

Disincentives That Have Slowed Implementation of Information Technologies 

From 1999 through 2003 I had the privilege to serve as the Gillings Professor of 

Health Management at Cambridge University and to consult to the National IT programme of the National Health Service. As you may know, the British government 

is investing billions of pounds to implement a fully functional, patient-friendly, electronic health record and system. While this task might appear to be easier in some 

aspects because of Britain’s single-payer system, of particular note to me was the 

observation that, even before the government’s new investment, well over 80 percent 

of England’s primary care physicians were facilitating patient care electronically, 

from booking appointments and writing prescriptions to making referrals, recording 

clinical notes and tracking treatment compliance. By contrast, it is estimated that 

fewer than 20 percent of U.S. primary care physicians utilize electronic health 

records. 

Interestingly, England’s primary care practices are ‘wired’ not because of government investment, but because the British pharmaceutical industry years ago offered 

to supply the necessary hardware and software to primary care doctors in return 

for access to anonymized prescribing information. In the United States I think such 

an arrangement would be seen as unseemly at best, and illegal at worst. While the 

British are neither less ethical nor more permissive of the misuse of identifiable 

health information than are Americans, in this country hospitals, physicians and 

other providers are incredibly reluctant to pursue any innovative financing for 

health IT, including networks that can securely link together a region’s providers, 

because of their concerns about the Stark self-referral prohibitions and other fraud 

and abuse standards. 

Whether these concerns are reasonable—and perhaps, Mr. Stark, you would say 

they are not—we have hospital lawyers who absolutely insist that it is simply not 

acceptable for any third party to furnish any information technologies—whether 

hardware, software, training or other services—to any provider at less than a full, 

fair market price. While some healthcare systems and providers are moving forward 

under the current standards, the general consensus in the healthcare community is 

that the Stark provisions, while quite important in many respects, are constraining 

progress toward the roll-out of an interoperable NHII. 

33 

It is in the interest of all stakeholders, including patients, that functional electronic health records and an interoperable health information system be deployed 

as promptly as possible. But the entities that are perhaps key to that deployment, 

the small and rural physician practices that still provide a majority of health care 

services in this country, are those that are least able to afford the capital investment for the purchase and hassle of implementing state-of-the art IT systems. Especially because many of the ‘savings’ of health IT accrue to other system participants, 

including employers, health plans and patients, financial outlays necessary for the 

purchase of the very building blocks of an NHII should reasonably come from a wide 

variety of sources, including government outlays and pay-for-performance programs. 

Actually, pay-for-performance programs represent a clear argument for payers to 

provide some of the financing for health IT—because in order to pay for performance 

you have to be able to track performance and quality in the delivery of care, and 

to do that efficiently you need sophisticated information capabilities embedded in 

the healthcare system. Reasonable safe harbors for dissemination of health information technologies and services intended to improve healthcare quality, efficiency and 

access would encourage deployment of essential health information systems, and I 

am very pleased to understand that provisions to that effect will be included in 

Chairman Johnson’s bill. 

Educating the Healthcare Workforce 

There is no question that momentum for bringing healthcare into the information 

century is building, and this is a very good thing. But hardware and software and 

standards and certifications will not be enough—we must ensure that we have 

enough doctors, nurses and information specialists to take real advantage of the opportunities for improved care and efficiency and access that health information technologies and an interconnected national health information infrastructure can provide. Recently, AMIA announced its 10 by 10 program, which aims to realize a goal 

of training 10,000 health care professionals in applied health and medical 

informatics by the year 2010; it is off to a great start with an initial partnership 

with the Oregon Health and Science University, and many other universities are 

seeking to participate. Our program uses classes, tutorials, web-based and in-person 

sessions to equip health care professionals to use health information and health information technologies to benefit patient care and to advance medical knowledge. In 

fact, we know from research that well-trained health providers combined with robust IT systems produce safer, higher quality care delivery. 

With the supply of physicians essentially constant and the nursing workforce 

aging along with the baby boomers, we will only be able to address the increasing 

demands for care of a growing and aging population by developing a better trained 

workforce, especially more nurses skilled in the use of information and information 

systems. Increased Federal support for education and training will be needed to address this workforce reality—and AMIA, along with the American Health Information Management Association (AHIMA), will develop specific recommendations for 

that support. 

A Few Conclusions 

In terms of the development and implementation of integrated health information 

systems with sophisticated capabilities, we have seen a great deal of progress in the 

last few years. Within the Veteran’s Administration, for instance, the case for improved safety and higher quality through the proper use of IT systems—including 

electronic records, decision-support programs, and process tracking and change 

analyses—has been largely made. We have seen the creation of the Office of the National Coordinator for Information Technology and a Commission to Certify Health 

Information Technology. The Commission on Systemic Interoperability mandated by 

the MMA has been convened, and Secretary Leavitt has announced a plan to create 

an American Health Information Community that will spearhead a range of publicprivate initiatives to develop information standards, certify new technologies, and 

provide long-term planning and governance for the electronic health environment. 

Someday we may look back at this moment and say, ‘‘The rest is history’’—but not 

just yet. Additional legislation and Federal support, and the development of accepted, enterprise-wide standards will be required if true interoperability and connectedness are to occur. 

From the start, Chairman Johnson has recognized the potential for improving the 

nation’s healthcare system through the proper use of information technologies. Further, she has been willing to face the complicated and difficult issues involved. All 

of us in healthcare are grateful and most appreciative for her wisdom, energy and 

persistence over the years. As I understand the Chairman’s current bill, it does not 

try to address all of the issues involved in creating an NHII to improve healthcare 

34 

quality, access and patient-centeredness. But it does forthrightly address some key 

‘sticking points’ that are keeping the nation from moving forward as quickly as we 

should and among them are first, establishment of the Office of the National Coordinator in statute; second, addressing the impact on patient’s rights and on healthcare 

quality and safety of varying and conflicting State and Federal information standards; and, third, reducing some current disincentives to the adoption of available 

health information technologies. AMIA looks forward to prompt consideration of the 

legislation and to supporting its implementation. 

It is my strong belief that the development of an interoperable, inter-connected 

national information system is not only a healthcare issue; it is really a matter of 

national security. Whether that point will be brought home by an outbreak of avian 

flu in a U.S. population center or an episode of bioterrorism or the occurrence of 

transmissible disease in our food supply chain, I do not know—but I do believe that 

any of those events could occur, and that we will be greatly hampered in our response if we cannot make information that is crucial for the public health and economic interests of our country available to the appropriate authorities in the most 

timely fashion possible. While a functional NHII will facilitate broad improvements 

in health care quality, access and affordability, it will also assist in protecting our 

security and I would urge your leadership in facilitating its development with all 

due speed. 

Thank you for the opportunity to appear before you today. I will be happy to answer any questions. 

f 

STATEMENT OF LINDA KLOSS, CHIEF EXECUTIVE OFFICER, 

AMERICAN HEALTH MANAGEMENT ASSOCIATION, CHICAGO, 

ILLINOIS 

Ms. KLOSS. Chairman Johnson, Mr. Stark, and members of the 

committee, my topic this morning is the quality of health data in 

the United States, and I have been asked to speak specifically to 

the status of the Code sets in place and other on the opportunities 

to support and enhance improved data for use of health IT. The 

American Health Information Management Association and its 

50,000 professional members are deeply committed to and actively 

participating in the adoption of standards based and the interoperable health IT. We are on the frontlines in implementing EHRs 

and other technologies, but technology alone is not enough. We 

need a concerted effort to ensure the quality of the data is as good 

as it can be, and we must start by improving the classification system for coding medical diagnoses and procedures. The current system, called ICD–9–CM, was developed and implemented in the 

1970s, and we believe it must be replaced by ICD–10–CM to classify diagnosis data, and ICD–10–PCS to classify data about medical 

procedures. Both of these ICD–10 replacement systems have been 

developed by Federal agencies, the Centers for Disease Control and 

the CMS, and both agencies have testified on several occasions regarding the need for better classification systems to improve information used in their programs. 

According to HIPAA, the Department of Health and Human 

Services must approve adoption of new code sets, and I would suggest that Congress can certainly aid in this process by supporting 

and requiring the Secretary to publish a proposed and then a final 

rule for adoption as soon as possible, and briefly, here is why. Each 

time we receive medical care, doctors, nurses, and other professionals collect important information about our health. They record 

our medical conditions and illnesses and types of treatment we received, any procedures performed, and then each piece of informaVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00038 Fmt 6633 Sfmt 6602 E:\HR\OC\26387.XXX 26387
35 

tion gets assigned a code. This coded data is the foundation for billing, claims processing, payment and pricing. It is used for public 

health and quality reporting, bio-surveillance, research, pay-forperformance systems, provider credentialing, fraud detection, and 

many other important uses. In other words, it underlies all of the 

major programs that this committee oversees and is looking to advance. The problem is that the current ICD–9 classification system 

is obsolete and it is beyond repair. Nearly every other developed 

country in the world has already replaced it with a version of ICD– 

10. 

Consider how medical practice has changed over the past 30 

years—new diseases, new treatments for those diseases, new medical procedures, threats of bioterrorism. The coding system we are 

using today was developed in the early 1970s, before MRIs, before 

laser surgery, before any of us had heard of AIDS or any of the 

medications used to treat it today, and this is a real problem. The 

value of a good classification system is its ability to accurately represent procedures that are performed or the illness that is diagnosed, and that is precisely what is missing from our current system. In addition, we are finding that the current system for 

classifying procedures is actually running out of codes. There are 

about 70 remaining unassigned codes, and the implications of this 

for quality reporting, research, and the appropriate payment for 

advanced medical technology are pretty obvious. We also believe 

that adoption of ICD–10 and ICD–10–PCS is an essential component of the health IT strategy being advanced by Congress and the 

administration, not a diversion from it. There are opportunities 

through ICD–10 to link to SNOMED–CT, which, as you know, has 

been licensed by the Federal Government. We can create robust 

mappings from SNOMED to ICD and leverage the opportunities of 

technology for automated coding going forward, offering a new paradigm for health data capture, aggregation, and reporting. In the 

future, it will be possible to use a variety of classification systems 

to meet specific information needs without laborious manual coding, and this is precisely what AHIMA and others are working toward. 

According to a 2003 Rand study, the benefits of implementing 

ICD–10 and PCS will outweigh the costs within a few years of implementation, and Rand noted that the cost of doing nothing may 

be greater than the cost of going forward with adoption. In summary, we urge Congress to move forward with ICD–10 in the 

United States and also to leverage through our health IT initiatives 

to redouble our efforts to ensure uniform coding practice and adherence to coding guidelines. I thank you so much, commend you 

for your leadership, and I will be very happy to answer questions 

on this important topic. 

[The prepared statement of Ms. Kloss follows:] 

Statement of Linda Kloss, MA, RHIA, CAE, Chief Executive Officer, 

American Health Information Management Association, Chicago, Illinois 

Chairman Johnson, Mr. Stark, and members of the committee, thank you for this 

opportunity to address the quality of health data and actions that are needed to improve it as part of the overall U.S. health IT initiative. 

The American Health Information Management Association and its 50,000 health 

information management professional members are deeply committed to and acVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00039 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
36 

i ICD stands for the International Classification of Diseases. 9 stands for the 9th revision and 

10 for the 10th revision. CM stands for Clinical Modification (a U.S. version of ICD–9 or ICD– 

10) ICD–9 and ICD–10 were developed and copyrighted by the World Health Organization 

(WHO). The WHO no longer supports ICD–9. ICD–10–PCS is a procedural coding system designed by the Centers for Medicare and Medicaid to replace the current inpatient procedural 

coding system currently included as part of ICD–9–CM. iiSee AHIMA’s Position Statement on Implementation of SNOMED–CT—www.ahima.org/dc/ 

positions AHIMA has also authored a white paper Coordination of SNOMED–CT and ICD– 

10: Getting the Most Out of Electronic Health Record Systems, which provides a complete description of the roles of terminologies and classifications in EHR systems and the importance 

of mapping to effectively use clinical information for multiple purposes. 

tively participating in the adoption of standards-based and interoperable health IT. 

We are on the front lines in implementing electronic health records and other technologies as well as the implementation of local and national health information exchange and continue to be on the forefront of professional activities including privacy, confidentiality, security, data integrity, consumer and professional education. 

My comments this morning relate to the urgent need for the Department of 

Health and Human Services to immediately initiate the regulatory process for adoption and implementation of ICD–10–CM and ICD–10–PCS code sets (referred to as 

ICD–10), rules, and guidelines as a replacement for the 30-year-old ICD–9–CM. 

ICD–9–CM is not meeting current healthcare data needs and cannot support the 

transition to an interoperable health data exchange in the U.S.i HHS must issue 

a final rule for adoption of ICD–10 as soon as possible to reverse the trend of deteriorating health data and to allow the healthcare industry to prepare for a smooth 

transition to modern classification systems by 2008. 

Specifically we are calling for the following action by HHS and the healthcare industry, and urge your support for these actions: 

• HHS must immediately initiate the regulatory processes to permit final implementation and use of upgrades to the deficient ICD–9–CM classification system 

by October 1, 2008. This upgrade will affect all diagnoses coding currently Volumes 1 and 2 of ICD–9–CM, as well as inpatient procedural coding, currently 

Volume 3 of ICD–9–CM. • Adoption of final rules as early a possible in 2006 will give the healthcare industry ample notice to commence systems conversion and other steps necessary 

to ensure a smooth and efficient implementation. • A coordinated, collaborative implementation strategy should be developed by industry stakeholder representatives to ensure broad input and a consensus-driven transition process. • System conversions and upgrades to implement ICD–10–CM and ICD–10–PCS 

should be accomplished by healthcare entities in conjunction with the UB–04 

and CMS 1500 (diagnosis codes only) system changes. • Robust, rules-based, maps among SNOMED–CT, ICD–10–CM and ICD–10– 

PCS, and ICD–9–CM should be developed promptly and distributed via the Unified Medical Language System (UMLS).ii

[I have placed a simple ‘‘understanding ICD–10’’ at the end of this testimony and 

this includes how ICD–10 would impact electronic health records.] 

ICD–9–CM should have been replaced nearly 10 years ago. Each year that passes 

results in further deterioration of the classification system and the data that it produces: 

• The ICD–9–CM coding structure and capabilities are in crisis. There are very 

few unassigned codes remaining to accommodate new diagnoses and procedures. • In addition to no further capacity for expansion, many of the codes now in use 

do not accurately describe the diagnosis or procedure concepts they are assigned 

to represent. • While the U.S. has used ICD–10 coding to report mortality data since 1999, we 

are now virtually the only industrial nation that has not upgraded its morbidity 

classification system. This failure threatens our ability to track and respond to 

international threats to public health and bioterrorism. Rather than being a 

world leader in the collection of high-quality health data, the U.S. lags far behind. 

At a time when Congress and the Administration are making significant progress 

toward improving our health information infrastructure, the critically needed upgrade of ICD–9–CM has been delayed with little acknowledgement of the serious 

consequences and no clear plan for fixing the problem. Further delays in adoption 

of ICD–10–CM and ICD–10–PCS increase the cost of an eventual implementation 

once ICD–9–CM completely breaks down. While the U.S. is working hard to adopt 

37 

iiiSee AHIMA’s Position Statement on Consistency of Healthcare Diagnostic and Procedure 

Coding—www.ahima.org/dc/positions ivSee Medicare Payment Advisory Commission March 2005 Report to Congress Chapter 4: 

Strategies to improve care: Pay for performance and information technology—www.medpac.gov 

health information technology, it must also accommodate a robust 21st-century classification system. 

According to the 2003 Rand study commissioned by the CDC, the benefits of implementing ICD–10–CM and PCS outweigh the costs within a few years of implementation. Rand further noted that the cost of doing nothing may be greater than 

actual implementation and further delay in adoption is likely to increase future implementation costs. This research did not examine the upgrade to ICD–10 as a component of the overall health IT improvements and thus it did not factor in the potential to change the paradigm of coding through accelerating the development of 

computer assisted coding tools. Thus, the potential benefits may be accelerated. 

Adoption of national electronic health records (EHRs) and interoperable information networks require improved classification systems for summarizing and reporting data. Government and industry leaders cite healthcare initiatives that rely on 

data but are in fact compromised by the continued use of ICD–9–CM. These include 

quality measurement, pay-for-performance, medical error reduction, public health 

reporting, actuarial premium setting, cost analysis, and service reimbursement.iii iv

Classifications systems are key elements of the health information improvement 

strategy. Failure to upgrade ICD–9–CM diminishes the value of the U.S. investment 

in SNOMED–CT. The anticipated benefits of an EHR cannot be achieved if 

SNOMED–CT must be aggregated into an antiquated classification system like 

ICD–9–CM. Conversion to ICD–10–CM and ICD–10–PCS will not only produce better information and support development of computer-assisted coding, they will 

serve as the necessary foundation for continued improvements and expansion of 

21st-century classification systems, nationally and internationally 

Healthcare providers, payers, and vendors are waiting for a notice from HHS signifying the intent to implement ICD–10 in order to begin planning and preparing 

for an anticipated use date. Vendors also need this notice to ensure new products 

will be available to accommodate these more advanced classification systems. U.S. 

healthcare entities will soon be converting databases and applications systems to accommodate the upgrades to UB–92 and the CMS 1500 claims forms and data sets. 

It would be effective and efficient to make ICD–9–CM upgrades at the same time. 

Without some indication that implementation is on the horizon, healthcare providers, payers, and vendors will be reluctant to make these necessary changes concurrently. 

As I have noted, the ICD–9–CM coding standard is in serious crisis. 

Terminologies and classifications from the 1970’s no longer fit with the 21st century 

healthcare system as numerous conditions and procedures are outdated and inconsistent with current medical knowledge and application. New advances in medicine 

and medical technology and the growing need for quality data cannot be accommodated. Data incomparability continues to increase globally and within the U.S. due 

to the use of these antiquated code sets. As of the spring 2005 ICD–9–CM coordination and maintenance cycle, the U.S. now has less than 70 remaining codes to represent health technology in the future. Two simple examples of the gross inadequacy 

of this classification system: 

• ICD–9–CM offers two codes for asthma, extrinsic and intrinsic. Current medical 

knowledge no longer considers this a clinically relevant distinction. In ICD–10– 

CM asthma codes are differentiated by mild persistent, moderate persistent; 

and severe persistent, which are the terms used in evidence-based practice 

guidelines. 

• In the area of procedures, ICD–9–CM simply lacks important specificity. There 

is a single non-specific code for ‘‘other revision of vascular procedure’’ encompassing a wide variety of surgeries on blood vessels. ICD–10–PCS in contrast 

will allow capture of the type of surgery, the specific artery or vein involved, 

and use of a device such as a graft or prosthesis. This kind of detail is essential 

for evaluating outcomes and efficacy and may decrease the supplemental information that is required to adjudicate a claim, in the form of a paper attachment 

or actual review of the medical record. 

Data coded under the ICD–9–CM system are the foundation for billing, claims 

processing, payment and pricing. It is used for public health and quality reporting, 

biosurveillance, research, pay for performance, provider credentialing and fraud detection. In other words, it underlies all the major programs that this Committee 

38 

v Background on SNOMED–CT and Mapping 

oversees and is looking to advance. However, ICD–9–CM does not meet any of the 

following criteria: 

• Code set standards outlined by the Health Insurance Portability and Accountability Act of 1996 (HIPAA); 

• New services and technology that must be acknowledged in CMS payment systems according to the Benefits Improvement and Protection Act of 2000 (BIPA); 

or 

• Characteristics of a procedural coding system outlined by the NCVHS in 1993. 

Significant costs are incurred by continued use of severely outdated and limited 

coding systems. For example, failure of our coding systems to keep pace with medical advances results in the use of vague or incorrect codes often taken from the 

claims form and thereby requiring excessive reliance on supporting paper documentation (attachments or copies of the health record). 

When the need to replace ICD–9–CM was identified in 1993, steps were taken by 

the National Committee on Vital and Health Statistics (NCVHS), the National Center for Health Statistics—CDC (NCHS) and the Centers for Medicare and Medicaid 

Services (CMS—then HCFA) to develop a migration plan to ICD–10 for morbidity 

and mortality coding. ICD–10 use for mortality coding in the U.S. was initiated in 

1999, however, while the rest of the industrial countries are now using their variations of ICD–10 for all reporting, the U.S. continues with the unsupported ICD– 

9–CM (the World Health Organization (WHO) now exclusively supports ICD–10) 

leading to data incomparability with the rest of its global community. 

Extensive work and dedication has gone into developing and evaluating these systems as replacements for ICD–9–CM. While there is significant support for this 

ICD–9–CM upgrade, there is also a segment of the healthcare industry, clinging to 

antiquated legacy systems, who continues to argue for further delay choosing to 

forgo the benefits of improved data and information available through 21st-century 

terminology and impeding progress toward achieving critical U.S. healthcare goals. 

In November 2003, the NCVHS recommended that HHS initiate the regulatory 

process for the adoption of ICD–10–CM and ICD–10–PCS as replacements for the 

30-year-old ICD–9–CM. At that same time, Congress—in language included in the 

Medicare Prescription Drug, Improvement and Modernization Act (MMA)—urged 

the HHS Secretary to move forward with promulgation of rules for adopting and implementing ICD–10–CM and ICD–10–PCS. It is now 2005—a year and a half after 

these distinguished recommendations—and HHS has taken no action. 

We believe that adoption of ICD–10–CM and ICD–10–PCS is a component of the 

health IT strategy being advanced by Congress and the Administration, not a diversion from it. You are aware that the federal government has licensed SNOMED– 

CT to make it available at no charge as a reference terminology in electronic 

health records. Mappings must be built from SNOMED–CT to ICD–10 so robust 

computer assisted coding applications will be available for adoption.v Today, the National Library of Medicine is preparing mappings to ICD–9–CM because there is not 

yet a final rule for ICD–10. I liken this to putting a model T engine in a Porsche. 

Electronic health records based on a reference terminology, such as SNOMED– 

CT, offer a new paradigm for health data capture, aggregation and reporting. In the 

future, it will be possible to use a variety of classification systems to meet specific 

information needs without laborious manual coding. This is what AHIMA and others are working toward. But it will take years for these technologies to be built and 

fully deployed in all provider and payer organizations throughout the U.S. A date 

certain for implementation of ICD–10 will drive application development and accelerate adoption of reference terminologies, mappings and artificial intelligence-aided 

coding engines. It will permit IT vendors, providers and payers to prepare for the 

change and develop software ‘‘crosswalks’’ between ICD–10 and ICD–9–CM to accommodate organizations that cannot overcome legacy system limitations before the 

effective date. 

In addition to adopting ICD–10, the U.S. must redouble its efforts to ensure uniform coding practice and adherence to coding guidelines. The 1996 HIPAA legislation called for uniformity of transactions and code sets, but states and payers, including CMS, persist in adopting local rules and guidelines that further undermine 

data integrity and add to administrative costs. If we are to have reliable interoperable data and cost effective fraud-deterring systems, we must promote uniformity 

no matter where the data originates and no matter who the payer is. This is a first, 

but important step in improving the quality of health data through standards. 

39 

I commend your leadership in supporting health IT improvements and urge you 

to codify the important work of the Office of the National Coordinator in the Department of Health and Human Services. I also commend your action to safeguard the 

privacy and security of personal health information. Health information management is fundamentally a field that safeguards patient data—its integrity, its effective use, and its privacy and security. 

In closing, we urge Congress to expedite adoption of ICD–10–CM and ICD–10– 

PCS and standards that will improve the accuracy and consistency of health care 

data. I stand ready to answer questions and to provide any additional information 

that is not covered in my written testimony. Thank you. 

Understanding ICD–10 

ICD–10–CM is a U.S. clinical modification of the World Health Organization’s 

(WHO’s) International Classification of Diseases, 10th edition (ICD–10) is maintained by the National Center for Health Statistics (NCHS). ICD–10 is now implemented or being implemented in all highly developed nations except the U.S. ICD– 

10–PCS was designed under contract by the Center for Medicare and Medicaid Services (CMS), specifically to replace the ICD–9–CM procedural coding system. 

The U.S. is the only developed country that has not adopted ICD–10 for mortality 

and morbidity. A total of 99 countries are currently using ICD–10 for both mortality 

and morbidity. The U.S. has used ICD–10 since 1999 for mortality reporting only. 

We need to implement ICD–10–CM in order to maintain comparability between 

mortality and morbidity data. 

Improved Data 

ICD–10 provides better data needed to meet the demands of an increasingly global and electronic healthcare environment. The ways in which coded data are being 

used today go well beyond the purposes for which ICD–9–CM was designed for back 

in the 1970s. Significant advances in the understanding of disease and treatment 

have been made over the last 30 years. 

ICD–10 provides a significant opportunity to improve the capture of information 

about the increasingly complex delivery of healthcare. ICD–10 will provide: 

• Better data to support quality and patient safety improvement activities 

• Better data for improved public health and bio-terrorism monitoring 

• Better data for more accurate reimbursement rates. 

ICD–10 and the EHR 

ICD–10–CM and ICD–10–PCS are better suited for use in electronic health record 

systems (EHR) than ICD–9–CM. The expanded availability of SNOMED–CT made 

possible by recent government licensing agreement increases the urgency of replacing ICD–9–CM with ICD–10–CM/PCS so the development of mapping tools to the 

ICD–10–CM and ICD–10PCS can be initiated. Valid maps are urgently needed to 

link from a highly specific terminology to a classification system so that information 

captured in the reference terminology can utilize the power of summary required 

for healthcare reporting and indexing offered by the classification systems. ICD–10 

medical coding system facilitates more robust mapping from SNOMED–CT clinical 

reference terminology in the EHR due to its greater size and granularity. 

Continued use of the outdated version of ICD (ICD–9–CM) diminishes the value 

of the U.S. investment in SNOMED–CT. The anticipated benefits of an EHR cannot be achieved if the reference terminology employed in the EHR, such as 

SNOMED–CT, is aggregated into a 30-year-old classification system such as ICD– 

9–CM for administrative use and indexing. Mapping from SNOMED–CT to ICD–10 

will improve the value of clinical data as it will: 

• Facilitate retrieval of coded data at the desired level of detail depending on the 

purposes for which the data are being used 

• Allow for administrative reporting functions such as reimbursement and statistical analysis not possible with SNOMED–CT alone. 

As part of their recommendations for patient medical record information terminology standards, NCVHS urged the federal government to promote the creation 

and maintenance of mappings between the recommended core set of terminologies, 

which includes SNOMED–CT, and medical code set standards designated under 

the Health Insurance Portability and Accountability Act (HIPAA). 

Replacing ICD–9–CM with ICD–10–CM is necessary in order to maintain clinical 

data comparability with the rest of the world concerning the conditions prompting 

healthcare services. The longer the healthcare industry continues to use ICD–9, the 

more difficult it becomes to share disease and mortality data at the time when such 

global data sharing is critical for public health. For example: 

40 

• ICD–10–CM would have better documented the West Nile Virus and SARS complexes for earlier detection and better tracking • ICD–10–CM also provides the ability to track bio-terrorism events and other 

public health outbreaks. 

SNOMED–CT: 

• Is a comprehensive, precise clinical reference terminology that contains concepts 

linked to clinical knowledge to enable accurate recording of data without ambiguity; • Is specifically designed for use in an EHR: 

• It is incompatible with a paper-based health record system. • Integrated into software applications, it represents clinically relevant information in a reliable, reproducible manner; • Supports clinical decision support systems, computerized physician order entry 

systems, and critical care monitoring; • Facilitates communication among clinicians and improves the quality of data 

available for research and measurement of clinical outcomes; • Ensures interoperability of patient information across software applications for 

disease management, treatments, etiologies, clinical findings, therapies, procedures, and outcomes; 

• Provides a common language that enables a consistent way of capturing, indexing, storing, retrieving, and aggregating clinical data across clinical specialties 

and sites of care; 

• Contains concepts linked to clinical knowledge to enable accurate recording of 

data without ambiguity; 

• Works through implementation in software applications, representing clinically 

relevant information in a reliable, reproducible manner; 

• Contains over 364,400 concepts with unique meanings and formal logic-based 

definitions; more than 984,000 English language descriptions or synonyms; and 

approximately 1.47 million semantic relationships. 

Mapping 

The purpose of mapping is to provide a link between one terminology and another 

in order to: v

• Use data collected for one purpose for another purpose, 

• Retain the value of data when migrating to newer database formats and 

schemas, and 

• Avoid entering data multiple times and the associated risk of increased cost and 

errors. 

See the AHIMA white paper, Coordination of SNOMED–CT and ICD–10: Getting 

the Most Out of Electronic Health Record Systems, for a complete description of the 

roles of terminologies and classifications in EHR systems and the importance of 

mapping to effectively use clinical information for multiple purposes. 

f 

Chairman JOHNSON. Thank you. Dr. Weiss? 

STATEMENT OF ALLEN WEISS, M.D., PRESIDENT, NAPLES COMMUNITY HOSPITAL HEALTHCARE SYSTEM, NAPLES, FLORIDA 

Dr. WEISS. Chairwoman Johnson, Representative Stark, distinguished members of the committee, thank you for the opportunity 

to advocate for patients, communities, care givers, and payers, 

whom we all agree have benefited by the use of IT in health care. 

My comments are based primarily on my own experiences that I 

believe may be typical for many care givers and leaders in health 

care today. More than half of the care in the United States today, 

as we have already heard, is from solo and small group practices 

of ten or fewer physicians. Naples, Florida, mirrors these demographics. By brief way of background, I was in solo private practice 

of rheumatology, internal medicine, and geriatrics for 23 years in 

Naples, Florida, before becoming President of the Naples CommuVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 E:\HR\OC\26387.XXX 26387
41 

nity Hospital System in the year 2000. When I was asked to join 

the leadership team at Naples Community Hospital, we had many 

independent, stand-alone, best-of-breed computer systems within 

the building. The interfaces among these systems were always intricate to build, expensive to maintain, and difficult to use. 

Learning best practices from other industries, such as manufacturing and banking, showed the wisdom of integration of systems. 

Having a common data repository accessible in different ways depending on the various needs of patients, providers, and payers, is 

key to both safety and efficiency. The push for an internal, seamless integration started seriously at Naples Community Hospital 

about 5 years ago. A dramatic improvement in functionality resulted from integration. This internal integration needs to be duplicated outside the hospital in the community, where the majority of 

patient care is rendered today. Any action facilitating integration 

at the time of installation is much more effective than late integration or none at all. Once computer systems are purchased, installed, and functional, they are difficult to change. Birth is easier 

than resurrection. Clearly, IT in health care will be the ten exchange that Andrew Grove, former chairman of the board of Intel 

Corporation, referred to in the past. Medical errors have been 

shown to decrease up to 95 percent at Vanderbilt Children’s Hospital in a study published in the January 2004 issue of Pediatrics. 

Naples Community Hospital’s experience shows over a 50 percent 

decrement in reported medication errors since medicine administration was automated using bar code technology and an electronic 

medical record. IT’s remarkable effect on efficiency will be documented in a study to be published this September by Dr. Richard 

Homestead, Co-Director of Rand Enterprise Analysis. 

Naples Community Hospital’s experience with the prevention of 

pressure ulcers similarly reflects cost savings by decreasing the 

length of the patient’s hospital stay. Pressure ulcers typically form 

on an area of the body under pressure in frail elderly patients. 

While the 2005 national prevalence was 7.3 percent, Naples Community Hospital’s recent prevalence was 1.7 percent. The use of IT 

to assess risk and initiate prevention in a timely manner yielded 

a huge savings in terms of misery and money. The most important 

problem to be solved today is the propagation of IT with integration. At least four options or combination of options are possible. 

Number one, allow the current stand-alone best of breed systems 

to evolve, hoping the purchasers of these systems will only demand 

integration. Number two, ask State or Federal government to modify rules and regulations that would facilitate propagation of integrated IT. Number three, ask the health care IT industry to work 

together with payers, providers, and consumers to develop common 

standards. Number four, ask payers, namely the insurers, both 

governmental and commercial, to financially support IT, whether 

by direct funding or implementation or by increased reimbursement for providers who do use IT in their practices, thinking that 

the cost of care would decrease as care is rendered in a more efficient and safe manner. Thank you for the opportunity to assist in 

this important endeavor. 

[The prepared statement of Dr. Weiss follows:] 

42 

Statement of Allen Weiss, M.D., President, Naples Community Hospital 

Healthcare System, Naples, Florida 

Chairwoman Johnson, Representative Stark, distinguished members of the Committee: 

Good Morning. Thank you for the opportunity to advocate for patients, communities, care givers, and payers who must benefit by the use of information technology (IT) in healthcare. My comments are based on my own experiences that, I 

believe, may be typical for many care givers and leaders in healthcare today. 

By brief way of background, I was in solo private practice of Rheumatology, Internal Medicine and Geriatrics for twenty-three years in Naples, Florida before becoming President of the Naples Community Hospital Healthcare System (NCH) in 2000. 

During my last decade of private practice I used a computer system for billing purposes. During my last two years of practice I additionally used an inexpensive, commercially available voice recognition system for recording clinical information. Mine 

was not a ‘‘high tech’’ office, and I was not a ‘‘high tech’’ person; my situation was 

rather typical of many offices across the United States at that time and even today 

where the majority of physicians are in either solo or small group practice. 

When I was asked to join the leadership team at NCH, we had many independent 

‘‘stand alone—best of breed’’ computer systems. The interfaces among those systems 

were always intricate to build, expensive to maintain, and difficult to use. Learning 

best practices from other industries such as manufacturing and banking showed the 

wisdom of integration of systems. Having a common data repository that can be 

accessed in different ways depending on the various needs of patients, providers, 

and payers is the key both to safety and efficiency. The push for internal, seamless 

integration started seriously at NCH about five years ago. Now, this internal integration needs to be duplicated outside the hospital, in the community where the majority of patient care is rendered. 

NCH is typical of many hospitals in terms of size and demographics—two locations with 539 beds, almost 4000 employees, over 35,000 admissions, 4000 births, 

600 open hearts surgeries, and 130,000 emergency room visits per year. We care for 

all who come to our hospital, with approximately 24% of our patients uninsured, unable to pay, or on Medicaid. 

We are a not-for-profit community-based system with three core competencies— 

demonstrative quality, operational efficiency and fiscal responsibility. Operational 

efficiency, with the extensive use of IT, nurtures demonstrative quality, in turn 

leading to fiscal responsibility. 

In striving to demonstrate quality, we earned a Healthgrades top 5% overall rating and a top 5% rating in cardiac, stroke, and pulmonary along with a top 3% in 

patient safety. We volunteered to participate in the Center for Medicare and Medicaid Services (CMS) project to demonstrate quality. This project compares us to 277 

other hospitals that have also volunteered regarding measures for congestive heart 

failure, acute myocardial infarct (heart attack), coronary bypass (open heart surgery), community acquired pneumonia, and joint replacement (hip and knee). We 

also use a balanced scorecard as popularized by Norton and Kaplan. This scorecard 

stresses both quality metrics and operational efficiencies in addition to the traditional financial metrics. The leadership team at NCH believes that these quality 

awards were facilitated by the use of IT. 

NCH’s most fundamental core competency is operational efficiency. Information 

technology is the tool that allows caregivers to provide better care more efficiently. 

A common metaphor concerning IT compares a hand and power drill. Both tools can 

produce the same end product, namely a hole, but the power drill accomplishes the 

task with a fraction of the energy in a fraction of the time. IT correctly used can 

not only drill the hole, but also guarantee that the hole was made in the right place 

without doing any neighboring damage. Moreover, IT’s improved ease, speed, accuracy, and reliability in a process can, more fundamentally, encourage other processes to change. 

Hospitals are set-ups for tremendous inefficiency. For example, a common scenario is a duplicate laboratory test: the attending physician, after assessing the patient, orders an appropriate test, followed by the consulting physician, not able to 

read or find the order in the chart, ordering the same test later in the day while 

the original test was already in progress. 

Physicians using computers to enter orders will have instant, clear knowledge. In 

the example above, the second physician would receive a ‘‘pop up’’ cautionary note 

stating that the same test is already in progress or that the results were now available. ‘‘Do you want to order it again?’’ would be the question displayed. The physician could exit the order-entry routine, avoiding another needle stick for the patient, 

another charge for the payer, and another inefficiency for the caregiver. Having the 

43 

right information at the right time will make for a safer, more efficient environment 

for patients and caregivers. 

Ordering and administering medicines have become more complex over time. Only 

60 drugs were commonly prescribed in 1960. In 2000 almost 6000 medicines were 

commonly prescribed. Who can keep 6000 drug interactions in mind? No human 

can, but a well functioning IT system can give instant feedback for incorrect doses, 

inappropriate interactions, potential allergies, as well as make suggestions based on 

medical evidence. At NCH’s smaller hospital, greater than a 50% decrease in medicine errors has been reported over the last four months since instituting a bar code 

system: portable bar code readers correctly identify patients wearing wrist bands 

with bar codes. Medicines are delivered to the bedside in bar coded containers, and 

nurses wear badges with bar code identification. Once the scanning is complete and 

the bar code reader states all is proper to proceed with the medicine administration, 

documentation is done automatically. A pharmacist who can intervene at any time 

electronically supervises the entire process. NCH’s larger hospital has had the same 

system in place for only two months with similar positive results. IT in this situation makes caregivers more efficient and patients safer. 

As previously stated, NCH has strived towards an integrated IT system since 

2000. On Saturday, September 8, 2001 our almost 1000 nurses started documenting 

all of their notes using digital technology. This event was a sea change and retrospectively may have been the tipping point for our institution in the use of IT. 

One remarkable result in saving patients from the misery of pressure ulcers has 

been directly related to the process change facilitated by the use of IT. Pressure ulcers are sores which form on skin areas under pressure in people who are typically 

debilitated, malnourished, and lying or sitting in one position. These sores, for the 

most part preventable, usually develop on the sacral area (backside) or the back of 

the heels. Each pressure sore adds suffering to the patient as well as cost to the 

healthcare system in terms of length of hospital stay and thousands of dollars in 

patient care. The national average for prevalence of pressure ulcers was 7.3% in 

2005. Patients can be assessed for risk of developing pressure ulcers by using the 

Braden Scale Scoring System that asks six questions and produces a score from six 

to twenty-three, inclusive. Starting intervention after doing these scores manually 

is burdensome to the caregivers, and often is not done. Using IT to facilitate the 

scoring and alerting the appropriate caregivers has been remarkable in effectiveness. 

Every patient at NCH is assessed for pressure ulcers once on admission and if 

at risk, daily thereafter. An elderly, malnourished, incontinent person with a fractured hip due to a fall in a skilled care facility is an example of a high-risk patient. 

Having a low score indicating risk for developing pressure ulcers, the patient is immediately seen by a nurse trained in prevention and given specific skin treatment. 

NCH’s pressure ulcer rate was above 12.8% at the start of using IT to measure risk 

and start intervention. NCH’s most recent assessment had a rate of 1.7% with no 

heel ulcers—a remarkable achievement. 

Drexel University has a competition for the best new use of technology in 

healthcare; our care givers won this year for using IT to decrease pressure ulcers. 

IT is the ‘‘power drill’’ in this remarkable example that allows for a process change 

resulting in decreased misery, improved safety, and lower cost. Patients, communities, care givers, and payers all benefit. 

Having strong integrated IT within the hospital is only the first step towards safety and efficiency. The goal of sharing health information is to have the patient, caregiver, and payer all have access to the portions of the health record that are appropriate for their respective needs. Granting practicing physicians access to the hospital system has been the most successful portion thus far. Sharing patient information from the physicians’ office to the hospital has not. Thus far, information has 

flowed in one direction only—hospital to physician. Physician to hospital, physicianto-physician, and patient to care giver still depend on patients’ and physicians’ 

memories, copied papers, and faxes. Patients and payers continue to depend on care 

givers sharing clinical information in much the same way as decades ago. We practice and treat using 21st century technology, but we record and archive the same 

way we did in the 18th century. Demographic information is being shared by hospitals and physicians offices with payers primarily for reimbursement purposes. 

Having a patient both involved and informed in his or her care are two goals that 

have been shown to improve health and decrease anxiety. Who isn’t anxious waiting 

for the results of a mammogram or PSA (prostate specific antigen)? Yet, we still 

can’t report these results quickly and safely using the IT currently available. This 

challenge can be helped by creating a common set of standards and policies to exchange information among patients, communities, caregivers, and payers. Moreover, 

44 

neutered data shared within and among communities may be helpful for public 

health purposes. 

Currently, NCH has about 525 physicians on staff. Over 350 of these physicians 

have secure access to the in-patient IT system from their offices and homes using 

high speed internet access. This access is in ‘‘read only’’ mode to borrow a term from 

the computer industry. Each physician purchases a key fob at cost from NCH—seventy-five dollars. Security is maintained by a series of numbers that change each 

minute by satellite on the fob’s screen. To access the system, a person must enter 

the numeric code for that minute in addition to a password. Early in our process 

of trying to integrate our physicians with the in-patient IT system, NCH charged 

five hundred dollars for installation of the system in an office. Physicians in larger 

groups needed the billing information available on their in-patients and did buy the 

system primarily for that reason. These physicians needed to have high speed internet access in their offices and gradually came to the realization that it was easier 

to obtain lab results, vital signs, and other clinical information on their in-patients 

by going on-line rather than playing ‘‘telephone tag’’ with the nurse on the floor who 

might be occupied caring for another patient. NCH, realizing that the in-patient 

nurse became more efficient when relieved of the ‘‘telephone tag’’ process, decided 

to waive the five hundred dollar charge if the physician would also keep all of his/ 

her hospital chart documentation up to date. NCH made this offer in conjunction 

with Florida’s Doctors’ Day in 2003. 

Now, physicians may obtain lab results, vital signs, nursing notes, and consultative notes on-line in a ‘‘read only’’ mode at any time and in any place with computer access. Obstetricians can view ‘‘read only’’ fetal monitor strips that are contemporaneous measures of an unborn child’s health during the labor process. Soon, 

physicians will be able to order medicines, lab tests, and other modalities on-line 

for their patients. This off-site entry capability should facilitate communication and 

decrease the inherent risk of phone orders which even if read back, could be misunderstood or transcribed incorrectly. 

Local nursing homes, visiting home nurse companies, and more recently a mental 

health facility and the Medical Examiner’s office also have secure access to the inpatient record. This capability has replaced the physical need for a person to travel 

to review a record or to fax dozens or even hundreds of pages per day to another 

provider. In the case of nursing home transfers, multiple nursing homes can review 

charts simultaneously to determine which patients are best suited for the home’s 

particular environment. This off-site, pre-discharge review decreases a patient’s hospital stay, previously devoted to in-person reviews by successive nursing facilities. 

In turn, costs are lowered and safety is improved. 

When NCH initiated this review process at the suggestion of the Director of Patient Advocacy, concerns about security and privacy arose. The electronic environment, although not perfect, is in fact better—safer—than the paper environment. 

With paper, anyone in the hospital can casually pick up a chart at the nursing station and browse anonymously. Patient charts have been minimally secured for decades without patients’ realization. However, to ‘‘open’’ a patient chart electronically, 

one must first have a password. Then the record is updated showing the date and 

time of access, what specifically was examined, and the claimed relationship of the 

viewer to the patient. To search for unauthorized access, the log of viewers is reviewed both randomly and also using specific algorithms. Not only are searches 

done on high profile patients and high profile diseases, but also records are examined for viewers with same last names and those designated as ‘‘who to notify in 

case of an emergency.’’ Hospital employees are warned that invasion of privacy will 

result in immediate termination, and NCH has enforced this regulation already. 

This termination policy has proven to be an effective deterrent. Long term using IT, 

health care will have comfort in security now perceived in the banking and finance 

industry. In the paper age, people had a false sense of security and privacy. 

An Electronic Health Record (EHR), for hospitals or physician offices of any size, 

requires support people with a variety of skills used episodically. Having full time 

employees to maintain hardware and software and train other employees does not 

take advantage of economies of scale or scope. Service personnel, as well as replacement parts, are needed for rapid repair to avoid unplanned downtime when computers are on-site. Even as a 539-bed two-hospital system, NCH could not support 

full time hardware service personnel on-site when needed only occasionally. NCH 

advantageously outsourced its main hardware, the computer server, to a specialist 

in remote hosting of computers. Similarly, NCH could not stock replacement parts 

economically. While remote hosting, web support and internet training do not obviate the need for face-to-face, hands-on employees, the need and cost are greatly reduced. 

45 

The cost of purchase, installation, maintenance, and training is a challenge for 

small or moderate sized groups as well. Smaller groups have the same problems in 

an exaggerated form. Ideally, by combining five hundred physicians and a 539-bed 

two-hospital system, the costs of installation, maintenance and training would come 

down and be manageable for everyone. 

However, the major disappointment in our local health care community has been 

not having seamless EHR shared by the treating physicians and NCH. About eighteen months ago two local groups of physicians (one with approximately fifty-five 

physicians and the other forty) shopped independently for an electronic health 

record for their respective practices. Both ultimately purchased excellent IT products which do not interface with the equally powerful hospital system. Moreover, 

solo and small groups have installed ‘‘stand alone’’ systems that will be hard to integrate in the future. The goal of having one common community system was very 

attractive for many reasons including patient safety, patient and provider convenience, support personnel training, system maintenance, and overall efficiency. A unified EHR helps make an area attractive for retirees who rank health care as a 

major concern. 

Compounding this problem, Collier County has a summer and winter population 

variation between a nadir of approximately three hundred thousand and peak of 

over four hundred thousand people. Moreover, while NCH was previously the sole 

hospital in Naples, now Cleveland Clinic Foundation of Collier County has an 

eighty-bed hospital and HMA, a for-profit hospital system, is in the permitting process to build a hundred-bed hospital. Most physician groups want to be able to interact with more than one hospital system. Most hospitals want to be able to service 

as many physicians and patients as possible in an efficient manner. Ideally, all EHR 

systems would have seamless interaction without the need for interfaces, but that 

is currently not the case. Complete integration would solve the problem of information transfer for patients, providers, and payers. 

NCH, in spite of relatively good relations with physician groups, could not build 

a mutual bridge of trust to share IT resources so that patients, communities, care 

givers, and payers would all benefit. What went wrong or why does Collier County, 

Florida have three major independent systems along with several additional ‘‘stand 

alone’’ systems? First, physicians questioned whether a successful outcome was possible given that installing IT in private offices was new territory for hospital services. Second, physicians wanted to be able to practice at all three hospitals in the 

county and not be locked into NCH if the other two systems chose a different IT 

system. Third, NCH was prohibited by self-referral laws from giving support services to physicians or groups of physicians. 

Any encouragement that could integrate healthcare IT within Collier County 

would be welcome and of benefit to all involved. Each system has advantages but 

having multiple different systems more than neutralizes any of the individual advantages as far as patient safety, provider convenience and payer efficiency are concerned. Hopefully, both IT companies and purchasers will understand that the next 

generation of software must be interoperable. 

Having common standards is quintessential for seamlessness, safety, efficiency, 

privacy, confidentiality, economic feasibility, and the development of evidence based 

medicine (EBM). Currently, a wealth of clinical information is not shared because 

it is either in paper form or in isolated digital form. Once a common language exists, 

large populations may be easily and quickly studied. EBM would advance at a much 

faster pace than can be done currently with controlled experiments. 

Common standards and digitalization of the EHR would also permit patients to 

have access to appropriate portions of their own medical records such as cholesterol 

results and blood pressure readings regardless of where they move to in the future. 

Patients who are involved with their own care are more compliant, are easier to 

care for, cost less, and have a better prognosis. 

IT also allows fungible work to be performed in remote locations. Currently, radiology reading and medical transcription are done abroad. Moreover, while calculations of total parental nutrition (a therapy to assist patients who cannot take in nutrition) are complex, requiring both a pharmacist and dietician’s time and attention, 

the math can be done anywhere in the world. Healthcare workers will always be 

needed in the workforce because face-to-face contact with patients is not fungible. 

However, healthcare workers will need to adapt by learning new skills throughout 

their careers and realizing that their value lies in the human interface. 

Is payment for IT implementation holding back its adoption nationally? Thus far, 

the caregivers have paid for their IT systems, and the care givers have benefited 

somewhat but not as much as the patients and payers have benefited. Patients 

cared for in a functioning IT environment have a safer, higher quality experience 

while not having any additional out-of-pocket expense. Payers benefit by having 

46 

fewer duplicate tests in addition to better quality, both of which always lower cost. 

Similar to the patients, the payers have not had any additional expense for their 

cost savings. The caregivers who have paid for the installation and maintenance of 

IT have benefited by avoiding medical errors. However, these care givers ultimately 

may lose revenue due to decreased patient volume as the power of IT shifts care 

to the outpatient arena. 

Ultimately, the right thing to do in caring for patients is to provide quality using 

the best tools (IT) available for operational efficiency. During evolutionary times, 

market share will shift as will profit margins for hospitals, caregivers, and payers. 

Those with the most to lose will resist the most; but in the free market with the 

exchange of information, change is inevitable. 

The pressing issue to be solved today is seamless propagation of integrated information technology and who pays the cost. 

At least four options or combinations these options are possible: 

#1 Allow the current ‘‘stand alone—best of breed systems’’ to evolve, hoping that 

the purchasers of these systems will ultimately demand integration. With this option, the providers—both hospitals and physicians—continue to pay rather than payers (insurance companies) or government. This ‘‘do nothing’’ approach could take too 

long and ultimately not develop a unified system. Reminiscent of this approach is 

the Beta versus VHS conflict in video technology, taking time but ultimately producing a sole system. 

#2 Ask state or federal government to modify rules and regulations that would 

facilitate propagation of integrated IT. With this approach, providers could continue 

to pay or government could financially support its mandate, speeding accomplishment. This government model has the advantage of universal applicability but the 

disadvantage of possible initial tax payer cost along with additional rules for providers. 

#3 Ask the healthcare information technology industry to work together with payers, providers and consumers to develop common standards for seamless information 

transfer among the in-patient and out-patient environments as well as among patients and payers. Thus far, the IT industry has not produced interoperability. With 

this option, the providers continue to pay but will be receiving better value. 

#4 Ask payers, namely the insurers—both governmental and commercial—to financially support information technology, whether by direct funding of implementation or by increased reimbursements for providers using information technology, 

thinking that the cost of care would decrease as care is rendered in a more efficient 

and safe manner. This approach would create more EHR care givers, perhaps allowing Option #1 to evolve faster or pressuring Option #3 to mature sooner. 

Thank you for the opportunity to assist in this important endeavor. 

f 

Chairman JOHNSON. Thank you very much, Dr. Weiss. Ms. 

Pritts? 

STATEMENT OF JOY L. PRITTS, ASSISTANT RESEARCH 

PROFESSOR, HEALTH POLICY INSTITUTE, GEORGETOWN 

UNIVERSITY 

Ms. PRITTS. Good morning. Madam Chairman, Congressman 

Stark, members of the Subcommittee on Health, I would like to 

thank you for inviting me today to testify on the confidentiality of 

health information as the National Health Information Infrastructure continues to develop. As I was introduced, my name is Joy 

Pritts and I am Assistant Research Professor at Georgetown’s 

Health Policy Institute. I have studied medical privacy issues, in 

particular medical privacy laws, for a number of years now, and I 

have spent a lot of time looking at State health privacy laws and 

the Federal privacy laws and how they interact with each other. 

Everyone seems to agree that as we develop a national Health Information Infrastructure and continue to push for this electronic 

exchange of health information, that protecting the privacy of the 

health information is an admirable goal and this is something that 

47 

we should be doing. The question remains, even after all that has 

gone on up to this point, how to accomplish that goal. A comprehensive minimal Federal standard supplemented by Federal privacy laws is what we are working with today. I would say that, at 

a minimum, that is where we should end up. 

Where we should not end up is relying on the HIPAA privacy 

rule as it is written now as a national Federal standard. The 

HIPAA privacy rule standing on its own in the absence of higher 

State privacy protections is simply inadequate. It does not cover 

many of the people and organizations who will have access to 

health information on the National Health Information Infrastructure as it is envisioned, and it was designed as a minimal set of 

standards from the outset. I would first like to briefly address the 

scope of HIPAA as it is currently written. It is our only generally 

applicable Federal privacy standard for health information. It is 

not enough. It is not broad enough. The way HIPAA was written, 

it covers only a core group of people and organizations that hold 

health care information: Health plans, health care clearinghouses, 

and health care providers who transmit health information electronically for certain administrative and financial purposes, usually 

in connection with processing health insurance and claims and 

things of that nature. 

Because of the way it is written, HIPAA is very limited in who 

it covers. It doesn’t even cover everybody in the core group of those 

who hold and use health information on a regular basis. For example, it does not cover health care providers who don’t engage in 

health care insurance transactions. That means that health care 

providers who provide health care services over the Internet and 

accept credit cards are not covered by HIPAA. This is an increasing 

area of medical practice. People turn to the Internet for medical 

care, for one thing, in order to keep their medical information private and out of their other medical records, but also because they 

don’t have health insurance and they have found this to be one 

mechanism that they can pay for their own health care at a reasonable level, is turning to the Internet. They are not covered by the 

Federal privacy protections. Beyond this core group that HIPAA 

does cover, it doesn’t cover all of the other entities that receive 

health care information from the core group. It doesn’t cover them 

directly. It doesn’t cover Workers’ Comp. It doesn’t cover life insurance. In particular, it doesn’t cover some of the people who are essential to the use of health care information. 

It also does not cover, according to the Department of Justice, 

employees of covered entities, and that is something that really 

needs to be remedied as we move forward. I would also like to emphasize that HIPAA sets minimal standards. It was conceived that 

way. It was written that way. When HHS received comments on 

the privacy rule and people requested them to set high standards 

for certain medical conditions, such as HIV, mental health treatment, consumers were reportedly told, this is the floor. We are not 

set out to set maximum or even best business practices. You can 

always turn to your State laws, and States have filled that gap 

where HIPAA has not reached a very high standard. Eliminating 

State law, as some have proposed to do, to set a uniform standard 

in order to ease the exchange of health care information would 

48 

1 ‘‘Black Eye at the MedicalCenter,’’ The Washington Post, February 22, 1999, p. F5. 2Selling Singer’s Files Gets Man Six Months,’’ Houston Chronicle, December 2, 2000, p. A2. 3Office of the District Attorney, Nassau County, New York, Press Release, November 23, 

2004, available at http://www.nassauda.org/dawebpage/pressreleases/NUMC%20arrests.htm 4 U.S. Attorney’s Office, Western District of Washington, Press Release, ‘‘Seattle Man Pleads 

Guilty in First Ever Conviction for HIPAA Privacy Rules,’’ August 19, 2004, available at http:// 

www.usdoj.gov/usao/waw/press—room/2004/aug/gibson.htm 

drastically lower consumer privacy rights and protections. We 

should not use the development of the National Health Information 

Infrastructure as an excuse to reduce privacy protections of health 

information to the least common denominator. Thank you. 

[The prepared statement of Ms. Pritts follows:] 

Statement of Joy L. Pritts, Assistant Research Professor, 

Health Policy Institute, Georgetown University 

I. Introduction 

Madam Chairman and Members of the Subcommittee on Health of the House 

Committee on Ways and Means: Thank you for the opportunity to testify before you 

today on protecting the confidentiality of health information and health information 

technology (IT). 

My name is Joy Pritts. I am a lawyer and an Assistant Research Professor at 

GeorgetownUniversity’s Health Policy Institute. In my position at Georgetown, I 

conduct research and analysis on a range of health privacy issues. Much of my work 

has focused on the Privacy Rule issued under the Health Insurance Portability and 

Accountability Act of 1996 (HIPAA), its scope and its interaction with state health 

privacy laws. I have written extensively on this topic including: The State of Health 

Privacy (2002); Implementing the Federal Health Privacy Rule in California (2002); 

‘‘Altered States: State Health Privacy Laws and the Impact of the Federal Health 

Privacy Rule,’’ Yale Journal of Health Policy, Law, and Ethics (Spring 2002); and 

‘‘Preemption Analysis Under HIPAA—Proceed with Caution,’’ In Confidence (April 

2003); and state-specific consumer guides on how to obtain and correct or amend 

medical records under a combination of the HIPAA Privacy Rule and state law, 

available at http://hpi.georgetown.edu/privacy/records.html. 

My testimony today will focus on what, if any, actions the federal government 

should take with respect to protecting the confidentiality of health information in 

order to facilitate the electronic exchange of health information, including the development of a national health information infrastructure (NHII). In particular, my 

testimony will address why, at a minimum, the HIPAA Privacy Rule must be expanded to directly cover all who have access to individually identifiable health information. I will also discuss the importance of protecting the ability of states to build 

on the floor of federal privacy protections, as is currently permitted by HIPAA. 

II. Background 

The electronic exchange of health information has the potential to improve the 

quality of health care. Electronic records will be more complete, legible, and more 

accessible to providers. These features should lead to improved quality of care, the 

elimination of repetitive tests and a streamlining of the administrative process. 

Under the right circumstances, electronic medical records should also be more secure than paper records. 

The risks of a computer-based health information system, however, remain real. 

Computerization of medical records will make large amounts of detailed personal 

data more readily accessible and transferable not only to health care providers but 

to others. When a breach in confidentiality occurs, it is often with respect to hundreds if not thousands of records at a time. For example, several thousand patient 

records at the University of Michigan Medical Center containing names, job status, 

treatment information and other data were inadvertently posted on public Internet 

sites for two months.1

Unintentional disclosure is not the only threat to heath information in electronic 

format. Some people improperly access and disclose medical records because they 

want to make money. A hospital employee sold country singer Tammy Wynette’s 

medical records to the National Enquirer and Star tabloids.2 Hospital employees in 

New York sold emergency room patients’ information to attorneys and others to use 

in insurance scams.3 Recently, an employee of cancer clinic accessed the medical 

records of a patient with terminal cancer, obtained credit cards in the patient’s 

name, and ran up over $9000 in charges.4

49 

5 A. Rubin, ‘‘Records No Longer for Doctors’ Eye Only,’’ Los Angeles Times, September 1, 1998, 

p. A1 6 C. Samuels, ‘‘Allen Makes Diagnosis of Depression Public; Medical Records Mailed Anonymously,’’ The Washington Post, August 26, 2000, p. V1. 7P. Slevin, ‘‘Man Wins Suit Over Disclosure of HIV Status,’’ The Washington Post, December 

30, 1999, p. B4. 8 J. Lite, D.Epstein and C. Katz, Clinton File Snoopers Rapped,’’ New York Daily News, September 11, 2004, available at http://www.nydailynews.com/news/local/story/230961p– 

198366c.html 9 U.S. Department of Health and Human Services, Preamble, Standards for Privacy of Individually Identifiable Health Information; Proposed Rule, 64 Fed. Reg. 59918, November 3, 1999, 

p. 59923. 10See 64 Fed. Reg. 59923. 

Others improperly access medical information to use against or embarrass a person. As New York Congresswoman Nydia Velasquez testified before the Senate Judiciary Committee, her medical records—including details of a bout with depression— 

were faxed from a New York hospital to a local newspaper and television station 

on the eve of her 1992 primary.5 On a more local level, the medical records of a 

Maryland school board member, who had been treated for depression, were sent to 

school officials as part of a campaign criticizing his performance.6

Still others improperly access and disclose medical information out of curiosity. 

An employee at a major hospital in Washington DC learned that one of her co-workers had HIV when she improperly accessed his medical record to find out why he 

was hospitalized. The employee revealed the patient’s HIV status to other co-workers who ostracized him.7 When former President Clinton was in the hospital for 

heart surgery 17 hospital workers who had nothing to do with his health care improperly tried to access his medical records. Perhaps most disturbing was the reaction of the hospital employees, one of whom commented, ‘‘I’m not surprised. People 

are nosy. It happens all the time.’’ 8

The risks of having medical information improperly accessed and disclosed are 

shared by nearly everyone: people going through a divorce or custody dispute; people 

who work in the health care system and who also happen to be patients of that system; people who live in small communities; and people with medical conditions that 

may subject them to stigma or discrimination. The consequences can be severe. People fear that they will be ostracized, that they may lose their custody battle, a political race, their job, or their insurance. 

As we continue to move toward the computerization of medical information, it is 

imperative to ask whether there are adequate privacy laws in place to reduce, if not 

eliminate, these risks. The HIPAA Privacy Rule is not sufficient. It is not broad 

enough to cover all of those who have access to health information, especially the 

growing number who will have electronic access. Furthermore, because HIPAA is 

designed to provide a minimal floor of privacy protections it is important that states 

retain their ability to offer higher levels of privacy protection. 

III. Federal Privacy Protections Should Apply To Everyone Who Receives 

Or Creates Identifiable HEalth Information 

HIPAA and the Privacy Rule issued under the Act only directly cover a core group 

of those who hold and maintain health care information (known collectively as ‘‘covered entities’’): health care providers who transmit health information electronically 

in connection with certain financial and administrative purposes, health plans and 

health care clearinghouses. As the Department of Health and Human Services 

(HHS) noted, ‘‘Unfortunately, this leaves many of the people and organizations that 

receive, use and disclose protected health information outside of the system of [federal] protection.’’ 9 First, HIPAA does not cover all health care providers. Only providers who transmit health information electronically for certain administrative and 

financial transactions (largely related to insurance) are covered by HIPAA. For example, an increasing number of health care providers offer health services directly 

to consumers over the Internet, accepting only credit card payments. These providers are beyond the scope of HIPAA. 

Other examples of persons who receive and use information and who are not covered by HIPAA include workers compensation carriers, researchers, life insurance 

issuers, employers and marketing firms. HHS also lacks the authority to directly 

regulate many of the persons that covered entities hire to perform administrative, 

legal, accounting, and similar services on their behalf, and who would obtain health 

information in order to perform their duties (called ‘‘business associates’’).10

Although HHS attempted to fill some of these gaps by requiring covered health 

care providers and health plans to enter into contracts that require those who perform services on their behalf (known as ‘‘business associates’’) to protect the conVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00053 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
50 

11 42 U.S.C. § 1320(d)-6(a). 12 42 U.S.C. § 1320(d)-6(b). 13 U.S. Department of Justice, letter for Alex M. Azar II, General Counsel, Department of 

Health and Human Services, June 1, 2005, available at http://www.usdoj.gov/olc/hipaa— 

final.htm 

fidentiality of the health information that they receive, HHS has no enforcement authority over these recipients. If business associates violate their contracts, HHS cannot impose civil or criminal penalties against them. 

Similarly, it appears that HHS may not have the authority to impose criminal 

penalties against individuals who improperly obtain or disclose individually identifiable health information even if they act for profit. HIPAA provides for criminal penalties for persons who knowingly in violation of the Act obtain or disclose individually identifiable health information relating to an individual.11 The Act provides 

the most substantial criminal penalties for those who commit these acts under false 

pretenses or with intent to sell or use the information for commercial purposes, personal gain or malicious harm.12 The United States Department of Justice has recently taken the position that these criminal penalties generally apply only to covered entities. Employees and others who improperly obtain and use health information (even if it is for profit or to cause serious harm to another) may not be prosecuted under this section.13 Under this interpretation, the hospital employees described above who sold emergency room patient information to lawyers could not be 

prosecuted under HIPAA. 

These gaps in federal privacy protection coverage leave large volumes of identifiable health information vulnerable to improper access and disclosure without any 

real remedies. The promotion of the electronic exchange of health information 

heightens the urgency of filling these gaps through federal legislation. Forming a 

national health information infrastructure without adequate federal privacy protections threatens not only the privacy of patients but also the very viability of such 

a system. 

III. Higher State Health Privacy Protections Should Remain In Place 

It is important to preserve the ability of states to impose more protective privacy 

standards on the use and disclosure of health information as we encourage the electronic exchange of health information. As currently written, HIPAA sets a federal 

floor for the protection of health information. The HIPAA Privacy Rule overrides 

(preempts) state laws that are less protective of privacy. However, state laws that 

provide health information privacy protections that are equal to or greater than 

those contained in the HIPAA Privacy Rule remain in place. These state laws offer 

additional privacy protection to people with medical conditions that often subject 

them to stigma or discrimination, such as HIV or mental health conditions. They 

give patients greater access rights to their own health information. 

Many in the health care industry would like to preempt all state health privacy 

protections so that the HIPAA Privacy Rule would serve as the uniform, national 

standard for protecting the privacy of health information. However, doing so would 

directly contradict a key, underlying premise of the HIPAA Privacy Rule. The Rule 

was explicitly conceived, written and issued as the minimally acceptable standard 

upon which states could build. Indeed, the ramifications of nullifying stronger state 

privacy laws are enormous and could be quite negative for patients on a number 

of fronts. 

In considering these issues, it is imperative to remember how we got to where we 

are today. States have traditionally exercised power over the health and welfare of 

their citizens. Over the years, states have developed an extensive range of statutes 

and regulations that protect the privacy of health information. Every state has some 

statute or regulation governing the use of health information. These laws can be 

found in health provider licensing laws, insurance laws, public health laws, the 

rules of evidence and civil procedures. Many states developed statutes and regulations that specifically address the use and disclosure of health information in a detailed and comprehensive fashion. In response to the needs of their citizens, most 

states have laws that provide privacy protections specifically for information related 

to medical conditions that are often associated with stigma or discrimination, such 

as HIV or mental health conditions. 

Additionally, in the 40 years preceding the issuance of the Privacy Rule, most 

states developed common law through court cases where people sued for the improper disclosure of their health information, often based on invasion of the right 

to privacy. The level of privacy protection afforded by the states, however, varied 

51 

14See J. Pritts, ‘‘Altered States: State Health Privacy Laws and the Impact of the Federal 

Health Privacy Rule,’’ Yale Journal of Health Policy, Law, and Ethics (Spring 2002). 15Preamble, Standards for Privacy of Individually Identifiable Health Information; Final Rule, 

65 Fed. Reg. 82461, December 28, 2000, p. 82471. 16Preamble, Standards for Privacy of Individually Identifiable Health Information; Final Rule, 

65 Fed. Reg. at 82731. 17Preamble, Standards for Privacy of Individually Identifiable Health Information; Final Rule 

(as Modified) 67 Fed. Reg.53192, August 14, 2002, p.53212. 

widely. Some states had broad, detailed privacy protections for health information 

while others had few protections.14

As efforts to encourage the health care industry to adopt computer technology intensified it became apparent that there was a need for at least minimum federal 

standards to protect the privacy of health information. Beginning as early as 1980, 

Congress attempted to pass health privacy legislation. In 1996, Congress once again 

took up the issue of health privacy, this time within the context of HIPAA. The Administrative Simplification provisions of HIPAA were designed to encourage the development of an electronically based health care system. Recognizing that protecting 

the privacy of health information was an important component of this system, Congress set itself a 3-year deadline for enacting comprehensive health privacy legislation. If Congress failed to act in that time, HHS was directed to write and issue 

health privacy regulations. HIPAA expressly provides that these federal regulations 

will not supercede a contrary provision of state law if the state standard is more 

stringent than the standards imposed by the federal regulations. 

Congress was unable to pass comprehensive health privacy legislation within the 

3-year period. No national consensus could be reached on some of the more difficult 

policy issues surrounding the protection of health information (such as the appropriate level of protection for HIV information or for genetic information and the 

right of an individual to sue for improper disclosures of information). Accordingly, 

the duty to craft federal health privacy protections passed to HHS. 

Throughout the rule-making process, HHS consistently maintained that it was establishing minimum federal standards, which would not disturb more protective 

state laws. In explaining its approach to the Privacy Rule, HHS stated: 

It is important to understand this regulation as a new federal floor of privacy protections that does not disturb more protective rules or practices. Nor do we intend 

this regulation to describe a set of a ‘‘best practices.’’ Rather, this regulation describes a set of basic consumer protections and a series of regulatory permissions 

for use and disclosure of health information. The protections are a mandatory floor, 

which other governments and any covered entity may exceed.15

In response to public comments requesting additional privacy protection 

for HIV/AIDS information, HHS again explained that it was taking a 

minimalist approach: 

Where, as in this case, most states have acted and there is no predominant rule 

that emerges from the state experience with this issue, we have decided to let state 

law predominate. The final rule only provides a floor of protection for health information and does not preempt state laws that provide greater protection than the 

rule. Where states have decided to treat certain information as more sensitive than 

other information, we do not preempt those laws.16

One and half years later, HHS responded to consumer concerns about the elimination of the requirement that covered entities obtain patient’s consent to use or 

disclose identifiable health information for treatment, payment, and health care operations, by reassuring them that state privacy protections would remain in place. 

HHS stated: 

The Privacy Rule provides a floor of privacy protection. State laws that are more 

stringent remain in force. In order to not interfere with such laws and ethical standards, this Rule permits covered entities to obtain consent. Nor is the Privacy Rule 

intended to serve as a ‘‘best practice’’ standard.17

In short, from beginning to end the Privacy Rule has been built on the understanding that it would serve as a minimal floor of protection and that state laws 

affording higher protections would be preserved. 

As a result, many state laws remain in effect. Some of these state laws afford a 

higher degree of protection to sensitive medical information, such as information related to genetic testing, HIV or mental health. States continue to afford their citizens the right to sue for improper disclosures of their privacy or to obtain their medical records. 

Many in the health care industry would eliminate these higher state health privacy protections in the interest of having more uniformity. The Privacy Rule has 

set minimal standards in every state. It has effectively created privacy standards 

52 

in states where few existed and raised standards in those with few protections. By 

establishing a federal floor of health privacy protections, HIPAA has already substantially evened the playing field. (See App. Fig. 2). Moreover, in response to the 

HIPAA Privacy Rule, many states have taken the initiative to re-examine their own 

health privacy laws. As a result, some states have amended their privacy laws, 

where appropriate, so that they are more closely aligned with the HIPAA standards. 

In practice, this voluntary action has also produced more uniformity.Preempting all 

state health privacy protections in the interest of producing yet more uniformity 

would have serious and wide spread ramifications. As discussed above, the HPAA 

standards are meant to be minimum standards. They were never intended to serve 

as the sole standard for protecting identifiable health information. Eliminating state 

law and relying on the HIPAA Privacy Rule would effectively lower the privacy protections in place for some of the most vulnerable health care consumers (such as 

mental health patients and those with HIV). (See App. Fig. 3) In many states, it 

would overturn hard-fought compromises over some of the very issues on which 

Congress has not been able to reach consensus. Such an approach would eradicate 

over 40 years of state common law giving consumers the right to sue for the improper disclosure of medical records. Given the variety of state laws that are designed to protect the privacy of health information it is difficult to predict the full 

range of consequences of such an approach. It is clear, however, that preempting 

state health privacy protections would seriously undermine states’ traditional ability 

to protect the health and welfare of their citizens. 

IV. Conclusion 

As we continue to move toward the electronic exchange of health information and 

the creation of a national health information infrastructure it is crucial that the privacy of health information not be compromised in the interest of expediency. Federal 

privacy protections for health information should be expanded to ensure that standards for using and disclosing health information are in place for everyone who receives or creates identifiable health information. Federal law also should ensure 

that those who improperly obtain use and disclose health information are subject 

to civil and criminal penalties. 

State laws that set higher standards for protecting the privacy of health information should remain in place. The HIPAA Privacy Rule is simply not adequate. 

Uniformity—At What Cost? 

Health Privacy Protections Before HIPAA (Fig. 1) 


Insert 26387A.001
53 

Healh Privacy Protections After HIPAA (Fig. 2) 

Health Privacy Protections—State Law Preempted by HIPAA (Fig. 3) 

f 

Chairman JOHNSON. Thank you, Ms. Pritts. Ms. Grealy? 

STATEMENT OF MARY R. GREALY, PRESIDENT, 

HEALTHCARE LEADERSHIP COUNCIL 

Ms. GREALY. Thank you, Chairman Johnson, Congressman, 

Stark, and distinguished members of the Subcommittee. On behalf 

of the members of the Healthcare Leadership Council, I would like 

to thank you for this opportunity to testify today. We are pleased 

to share with you some specific recommendations regarding ways 

in which Congressional action can clear the way for greater 

progress in the adoption of health IT. Madam Chairman, there are 

at least two things that we know with certainty on this issue, one 

good and one is a matter of concern. We know that the promise of 


Insert 26387A.002 Insert 26387A.003
54 

health IT is enormous. With widespread use of new technology, we 

can deliver health care with greater efficiency, bring about tremendous advances in patient safety, and literally transform our health 

care system to better utilize the wealth of knowledge and ideas 

that are possessed by health professionals throughout the country. 

We also know that there are obstacles that must be overcome before we can move forward. On that subject, I would like to turn 

specifically to the issue of privacy. Now, there is a misconception 

that the HIPAA privacy rules may not adequately protect the confidentiality and security of electronic medical information transmitted across a national health care network. We think that these 

concerns are not well founded. 

The HIPAA privacy and security rules were created specifically 

to protect electronic transfers of financial and administrative information. Significant civil and criminal penalties exist for improper 

disclosure. These strong safeguards also exist for clinical records. 

What is troubling, though, is the fact that the HIPAA privacy rule 

as it exists today does not always supercede State laws and regulations, and, in fact, it permits significant variations in the ways in 

which States can regulate medical privacy matters. As a result, 

providers, clearinghouses, and health plans are required not only 

to comply with the Federal law, but they also must comply with 

State privacy restrictions that are more stringent than the HIPAA 

rule. This will make the creation of an effective health information 

network, one that crosses that State boundaries, virtually impossible, and I think we heard that from Dr. Brailer this morning. Let 

us paint a very realistic scenario. A health care provider wants to 

acquire and implement a new health IT system that will allow 

them to be part of an interstate information network. This health 

provider knows that privacy protections vary widely State to State 

and are found in literally thousands of statutes, regulations, common law principles, and advisories. 

So, our hypothetical health care provider must, number one, find 

and identify every possible privacy-related rule, statute, law, and 

ordinance. Number two, they must obtain legal opinions as to 

whether the State laws are contrary to HIPAA and whether the 

contrary rules are more stringent. Number three, they must figure 

out how to comply with either the Federal rule, the State rule, or 

in some cases, both simultaneously. Then they must build their 

computer systems in a manner that ensures compliance, realizing 

that these laws can change even before the system is finalized. I 

have provided the Committee with a much more detailed nine-step 

process for determining this compliance for just one State. It will 

be much more complex when dealing with all 50 States. At the 

HLC, we understand the challenge that HIPAA-covered entities 

face because we took the initiative to commission a multi-jurisdictional study of State privacy laws and regulations to help with 

compliance. It is a study that initially cost more than $1 million 

and must continuously be updated, at considerable cost, to reflect 

any newly-enacted State privacy rules and regulations. Now, once 

the National Health Information Network is in place, systems will 

have to be constantly retooled, staffs continually retrained for these 

variations among the States. A network that is constrained by myriad State requirements on, for example, prior consent to use health 

55 

care records for treatment, will operate at only a fraction of the 

speed and efficiency necessary to improve patient outcomes. Much 

of the promise of this new technology will be lost as a result. 

So, what is the answer? Madam Chairman, the current patchwork of applicable State and Federal privacy laws will be a severe 

disincentive for stakeholders who would otherwise be enthusiastic 

about participating in a national Health Information Network. Our 

solution is both clear cut and essential. Congress must enact Federal preemption provisions that will establish a unified national 

privacy standard. A uniform patient privacy framework is critical 

to the viability and interoperability of National Health Information 

Network. We stand on the verge of doing something extraordinary 

for patients, for health care consumers, and for our entire health 

care system. We urge Congress to take the final steps necessary to 

make the promise of health IT a reality. The members of the 

Healthcare Leadership Council, many of whom were the earliest 

adopters of electronic medical records and pioneers of this technology, look forward to working with you and the Committee on 

this shared vision. Thank you. 

[The prepared statement of Ms. Grealy follows:] 

Statement of Mary R. Grealy, President, Healthcare Leadership Council 

Chairman Johnson and Members of the Subcommittee, I want to thank you on 

behalf of the members of the Healthcare Leadership Council (HLC) for the opportunity to testify on the adoption of health information technology (HIT) and areas 

where Congressional involvement can further these efforts. 

The Healthcare Leadership Council supports the efforts of the President, the Office of the National Coordinator for Health Information Technology (ONCHIT), and 

the Congress, to create a national health information infrastructure. We believe that 

legislation should especially focus on areas where Congress and the President must 

act to facilitate successful implementation of HIT. We believe that one such area 

is harmonization of state laws regarding the confidentiality of individually identifiable patient information. 

Any regional or national system designed to facilitate the sharing of electronic 

health information must adequately protect the confidentiality of patient information. Efforts to establish a National Health Information Network or NHIN must 

take into account the privacy and security challenges associated with exchanging 

patient information among health care providers, consumers, payers and other authorized entities. Addressing these issues appropriately will be essential to achieving the interoperability necessary to improve the quality and cost effectiveness of 

the health care system—while still assuring patients’ confidence that their information will be kept private. 

Confidentiality of patient medical information is governed by the Health Insurance Portability and Accountability Act of 1996 (HIPAA) statute and the privacy 

regulation promulgated thereunder (the Privacy Rule). Although HIPAA establishes 

a federal privacy standard, it permits significant state variations that will create serious impediments to ‘‘interoperability’’ of clinical information, particularly when information is sent across state lines. The patchwork of applicable state and federal 

laws will likely be a significant disincentive to participation in a national health information network for virtually all stakeholders. We believe Congressional action to 

establish a uniform federal privacy standard will help to ensure the viability of a 

national health information network. This is an important step that Congress can 

take to facilitate progress toward interoperability. 

Before I discuss the importance of these actions, let me first explain the perspective that HLC brings to the issue. HLC is a not-for-profit membership organization 

comprised of chief executives of the nation’s leading health care companies and organizations. Fostering innovation and constantly improving the affordability and 

quality of American health care are the goals uniting HLC members. Members of 

HLC—hospitals, health plans, pharmaceutical companies, medical device manufacturers, biotech firms, health product distributors, pharmacies and academic medical 

centers—envision a quality driven system built upon the strengths of the private 

sector. Several HLC member organizations have been among the earliest adopters 

56 

and pioneers of health information technology. We believe HIT has the power to 

transform our health care system and provide increased efficiencies in delivering 

health care; contribute to greater patient safety and better patient care; and achieve 

clinical and business process improvements. 

Since 1996, HLC has led the Confidentiality Coalition, a broad-based group of organizations who support workable national uniform privacy standards. The Confidentiality Coalition includes over 100 physician specialty and subspecialty groups, 

nurses, pharmacists, employers, hospitals, nursing homes, biotechnology researchers, health plans, pharmaceutical benefit management and pharmaceutical companies. 

During Congressional consideration and subsequent regulatory development of the 

HIPAA Privacy Rule, the Confidentiality Coalition played a leadership role, working 

with members of Congress and the administration to advocate for a workable privacy rule. We sought a rule that would strike the appropriate balance between protecting the sanctity of a patient’s medical information privacy while, at the same 

time, ensuring that necessary information is available for providing quality health 

care and conducting vital medical research. We believe that the Privacy Rule largely 

achieved this balance and has increased consumers’ confidence about the privacy of 

their medical records while allowing providers and payers to establish the procedures necessary to accomplish the dual goals of privacy protection and the delivery 

of quality health care. 

Under the Privacy Rule, disclosing individually identifiable health information for 

purposes other than carefully defined appropriate health care activities is prohibited 

unless the patient grants specific, prior written authorization. For example, among 

others, information cannot be disclosed to employers, the media, or neighbors. It is 

important to note that HIPAA has strong penalties for non-compliance. The Department of Health and Human Services (HHS) may impose civil monetary penalties on 

health plans, providers or clearinghouses of up to $250,000 for failure to comply 

with a Privacy Rule requirement. HIPAA also has criminal penalties. Persons who 

knowingly obtain or disclose individually identifiable health information in violation 

of HIPAA face a fine of $50,000 and up to one year of imprisonment. Criminal penalties increase to $100,000 and up to five years imprisonment if the wrongful conduct involves false pretenses. Penalties for wrongful conduct that involve the intent 

to sell, transfer, or use individually identifiable health information for commercial 

advantage, personal gain or malicious harm increase to $250,000 and up to ten 

years imprisonment. Criminal sanctions are enforceable by the Department of Justice—and there has already been one criminal conviction under the rule. Thus if you 

use a patient’s record, without permission, for reasons other than legitimate health 

care operations, you could be sanctioned with severe federal civil and criminal penalties. 

As Congress and the Administration have considered the issues relating to the facilitation of a national health information network, questions about the privacy and 

security of electronic medical information have arisen. A common misperception is 

that the HIPAA rules may not adequately protect the confidentiality and security 

of electronic medical information in the context of an NHIN. It is important to remember that the HIPAA privacy and security rules were adopted to provide appropriate safeguards for the electronic exchange of financial and administrative information, and the regulation expanded this to also include paper records. The electronic exchange of clinical information is no different. 

Thus, HLC and the Confidentiality Coalition believe that the existing HIPAA Privacy Rule provides strong privacy protections—effective to address the privacy and 

security challenges associated with exchanging patient information among health 

care providers, consumers, payers and other authorized entities in the context of a 

NHIN. 

However, we are troubled by the fact that the HIPAA Privacy Rule’s preemption 

standard permits significant state variation. In general, HIPAA supersedes contrary 

provisions of state law. For example, the HIPAA standards for the electronic exchange of financial and administrative information, such as health insurance claims, 

preempt state laws that require billing records to be maintained or transmitted in 

written rather than electronic form. Congress, however, set a different preemption 

standard for privacy protections under HIPAA. The Privacy Rule does not supersede 

contrary state laws that are more stringent than the federal standard. As a result, 

providers, clearinghouses and health plans are required to comply with the federal 

law as well as any state privacy restrictions that are more stringent. In the context 

of HIPAA implementation this has been extremely difficult. In the context of a 

NHIN it is potentially impossible. 

State health privacy protections vary widely and are found in thousands of statutes, regulations, common law principles and advisories. Health information privacy 

57 

1 Under the Privacy Rule a covered entity is permitted to use and disclose protected health 

information without authorization for the following purposes or situations: 1) to the individual; 

2) for treatment, payment and health care operations; 3) for uses and disclosures with an opportunity to agree or object; 4) for uses and disclosures that occur incident to an otherwise perContinued 

protections can be found in a state’s health code as well as its laws and regulations 

governing criminal procedure, social welfare, domestic relations, evidence, public 

health, revenue and taxation, human resources, consumer affairs, probate and many 

others. The rules typically apply either to specific entities—such as hospitals or 

county health departments—or to specific health conditions, and no two states are 

the same in this regard. Virtually no state requirement is identical to the federal 

rule. 

Thus HIPAA covered entities, such as hospitals, physicians and health plans, 

must find every possible state rule, statute, law, ordinance, etc. concerning every aspect of privacy, obtain a legal opinion as to whether or not the law, regulation or 

ordinance is contrary to the HIPAA privacy rule, and then determine if the contrary 

state rule is more stringent than the federal rule. Once this analysis is complete, 

covered entities must then determine how to comply. Within one state, there may 

be cases where the federal law applies and in others where both federal and state 

law applies. At that point, covered entities must build their information technology 

systems to implement the legal interpretation and hope that there isn’t a change 

in law before the systems are up and running. But since nothing prevents additional 

state privacy rules and regulations from being enacted, it would take constant monitoring of state action, retooling of systems and retraining of staff. 

HLC attempted to assist covered entities in this process by commissioning a 

multi-jurisdiction study of state privacy laws, case law and regulations that analyzes the relationship between the federal Privacy Rule and state laws. The study 

is formatted as a website where authorized users can search state laws on a particular subject and determine whether or not they must comply with the state law, 

the HIPAA Privacy Rule, or both. The study initially cost more than $1 million and 

costs $100,000 to update annually. The Department of Health and Human Services 

made it clear when issuing the Privacy Rule that it would not provide this analysis 

and that covered entities must determine whether federal or federal and state law 

applies. 

The issues associated with privacy compliance are greatly magnified in the context of a NHIN. The creation of a successful NHIN will require a national system 

of interoperable systems that can exchange health information. Making information 

available through or to a NHIN conceivably could require entities to comply with 

a range of different state laws each time they disclose information in the context 

of a federated system. 

Some proposals attempt to address the patchwork of state privacy laws and regulations by suggesting that states should work together regionally to develop privacy 

agreements or harmonize state requirements. This would require states to review 

their own laws, regulations and ordinances, reach consensus with the other states 

on uniform rules, get the agreement enacted within each state without modification 

and ensure that existing rules are preempted. However, unless all 50 states agree 

to the same rules, this will not be adequate to address the problem of conflicting 

state regulation relative to interoperability of HIT nationwide. 

My testimony includes, as an attachment, a map developed by the Indiana Network for Patient Care. Each dot represents a patient seen at an Indianapolis hospital during a six month period. While the dots are stacked very deep around Indianapolis as you would expect, patients served by the Indiana health providers during this period were also located in 48 of the 50 states. Looking at this map it is 

easy to see why regional agreements will not be adequate to address the myriad regulations with which providers and others will need to comply to achieve ‘‘interoperability.’’ 

One of the most common areas for states to legislate regarding privacy is that of 

patient consent and authorization for uses of their medical information. There are 

prolific and varying state requirements regarding who may access patient information, for what reason, and with what type of notice and consent to patients. During 

promulgation of the HIPAA Privacy Rule, the issue of requiring providers and payers to obtain the prior written consent of patients before using their information was 

examined and debated at great length. The final rule as modified allows covered entities to use patients’ medical information without prior authorization for medical 

treatment, claims payment or health care operations, or as otherwise permitted or 

required by the Privacy Rule 1 For any other uses, providers must obtain a written 

authorization from each patient. 

58 

mitted use or disclosure; 5) for public interest and benefit activities; and 6) of a limited data 

set for purposes of research, public health or health care operations. 

Requiring providers and payers to obtain prior consent for treatment, payment 

and health care operations was rejected because of concerns that a prior authorization requirement would seriously delay and disrupt the care of patients, particularly 

the most vulnerable elderly and sick patients. For example, elderly patients would 

not be able to send a family designee to a pharmacy to pick up a prescription without first going to the pharmacy to sign consent forms; pharmacies would not be able 

to fill prescriptions for patients phoned in by physicians; and emergency medical 

personnel would be forced to get consent forms signed before treating patients—even 

when contrary to best medical practice. These concerns were not simply theoretical. 

Maine passed a law requiring prior consent for health care purposes, the law was 

suspended just 12 days after taking effect because of the chaos that ensued in hospitals and pharmacies. 

One of the primary goals of a national health information network is to improve 

the quality of health care by giving providers the information they need quickly. A 

NHIN that is constrained by various state authorization or consent requirements 

will provide only a fraction of the speed and efficiency necessary to improve patient 

outcomes. These unnecessary requirements are extremely burdensome for providers, 

impeding their ability to provide timely and efficient medical services. Even worse, 

they offer little value to patients. Varying notice provisions which force covered entities to provide notice to patients in triplicate are simply not helpful to patients who 

are more likely to be overwhelmed by the paperwork these requirements necessitate. It would be much better for patients if they, providers and payers could rely 

on a uniform standard based on the principles of the HIPAA Privacy Rule—that information can be used and disclosed only by authorized persons in order to provide 

and pay for medical care—and that information will be kept confidential. 

As a NHIN becomes a reality, we fear that states may also begin to legislate the 

degree to which patients can control their own electronic health record—deciding 

who can access what information for which reasons. Especially in emergency situations, where treatment is a matter of life and death, electronic health records can 

be a life-saving tool for clinicians. However, if electronic records are to be utilized 

as a part of care delivery, patients simply must not be able to selectively provide 

information that may be relevant for treatment purposes. Should this occur, providers would be unable to rely on the NHIN as a tool for diagnosis and treatment 

as it may or may not include the facts necessary for the delivery of quality medical 

care. In addition, providers are very concerned about the liability that might result 

from their reliance on incomplete information. 

In conclusion, I reiterate the belief that the current patchwork of applicable state 

and federal laws is a significant disincentive to participation in a national health 

information network for virtually all stakeholders. Indeed, already HLC members 

working with emerging state consortia are reporting difficulty in navigating the 

variations in state privacy laws among bordering states. 

We believe that it will be extremely difficult to achieve interoperability without 

a more uniform framework for the protection of patient privacy. Absent such a 

framework, the barriers to using health information technology to improve the quality and efficiency of health care will be substantial and covered entities will be discouraged from participating. Federal preemption provisions that establish a unified 

national standard are essential to the viability of a NHIN. We believe the HIPAA 

Privacy Rules should be the national standard and should supersede state laws. 

Covered entities already have established HIPAA compliance programs, appointed 

privacy officers and implemented extensive staff training. But more importantly, we 

believe that HIPAA provides the privacy and confidentiality protections demanded 

by consumers and can set a high, uniform standard for health information practices 

across all states. 

The Healthcare Leadership Council appreciates the opportunity to testify on the 

protection of patient privacy and the development of health care information technology. We look forward to working with the Subcommittee in pursuit of these goals. 

Any questions about my testimony or these issues can be addressed to me or to Ms. 

Theresa Doyle, Senior Vice President for Policy, Healthcare Leadership Council 

(telephone 202–452–8700, e-mail tdoyle@hlc.org). 

f 

Chairman JOHNSON. Thank you very much. I would like to 

throw out a question to the whole panel. We have had two very difVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00062 Fmt 6633 Sfmt 6602 E:\HR\OC\26387.XXX 26387
59 

ferent opinions about the adequacy of HIPAA even as a national 

minimum and the role of the State laws. It is hard for me to see 

how you have a nationally operable system with the extent of variation caused by not just State laws, but all these regulations and 

subsections of State action. So, this is a very big issue. I hope that 

some of the studies that both HHS is commissioning now and that 

I am interested in seeing will begin to focus on what are the little 

differences that could be easily adjusted and what are the big differences. I would like those of you who face this in everyday life 

to give us examples of the problems and maybe comment on Ms. 

Pritts’s testimony that too many are left out, that the standards 

are too minimum, versus Ms. Grealy’s testimony that the laws are 

really quite adequate, but we can’t tolerate the degree of variation 

if we are going to have an interoperable national information system. We will just start down the line. 

Dr. DETMER. Thank you. An excellent question, obviously. I 

agree with you. I think that studies underway are quite important, 

and I do think there are some place where we will find corrections 

and some things that need to be done. I think at the end of the 

day, I think part of what the study has to look at are the real tensions between some of these transformational gains and safety, 

quality, and so forth against some of the tensions that come where 

you need access to information, but at the same time, you also 

want to have privacy, and I think those are real tensions and at 

some point, I think we are going to have to have real basementto-ceiling standards for an NIHH to work. A patient who works in 

the District, lives in Virginia, gets their care in Maryland or something like that may have a provider, excuse me, an insurer in any 

one of those three locations. You just can’t have interoperability, I 

think, at the end of the day, without it. I think it is going to take, 

frankly, some will and leadership at that point and I think we will 

have to face this. As I say, I think the studies are important. I 

think there are some things that will need to be done. But ultimately, I think we are going to have to deal with this. 

Chairman JOHNSON. Thank you. Ms. Kloss? 

Ms. KLOSS. I would agree that we will learn from the studies, 

perhaps, that some of the States have found additional protections 

that should be added to the current floor we have. I would also suggest that it is incumbent on us in the design of the National Health 

Information Network to do all we can to use best practices, new 

best practices and new technologies that, again, weren’t necessarily 

conceived of or available at the time that the HIPAA regulations 

were crafted. 

Chairman JOHNSON. You may in your comments want to differentiate as to Dr. Brailer, between this issue of transaction 

standards and privacy standards as the public thinks about them. 

Dr. Weiss? 

Dr. WEISS. Thank you. I will answer it in two ways. First, as 

a solo private practitioner, it is hard for an individual in an office 

to understand everything that is going on around them. They want 

to have an interaction with the patient and take care of that patient and move on. They are less concerned about national standards, just because of the practicality of the thing. As a hospital system, we obviously obey all the regulations, but it becomes confusing 

60 

and expensive to have multiple regulations, and even more importantly, as we think about globalization—we are worrying now 

about State versus Federal—we send our night radiology reading 

to Australia right now. We send some of our dictation—some of our 

practitioners in our town send our dictation abroad, so that the 

real standards are not—we are quibbling over something in our 

country and not realizing that we are a global network, so that 

really, we need international common standards so that we can 

share the—and any of the work that is fungible around the world, 

which will make things more economical for everyone. There aren’t 

ten best ways of doing anything, so to have 50 different ways, be 

it 50 different States, of doing something is just inane and expensive. So, we really need to do this. We do need this interoperability. 

Trying to get that perfect to interfere with good will always slow 

us down. No legislation, with all due respect to all legislation, can 

be absolutely perfect, so that there will always be exceptions. It is 

just a question of doing what is best for the common good and sacrificing a little bit of individual freedom, although it is not comfortable, just to make this a viable system. 

Ms. PRITTS. Do you want me to wait until last? 

Chairman JOHNSON. Ms. Pritts? 

Ms. PRITTS. Should I wait until last? 

Chairman JOHNSON. All right, fine. Ms. Grealy? 

Ms. GREALY. I think the point here is that HIPAA provides us 

a framework. I think the comments about the studies that will be 

underway to really look at all 50 States, the key here is that we 

need to find a single national uniform standard that is a workable 

privacy rule. So, I think the studies underway are something that 

will be very valuable, but at the end of the day, we think HIPAA 

provides a framework. A lot of work has gone into compliance with 

the current HIPAA standards. Entities have installed privacy officers. They have done staff training. So, we think it does provide us 

a reasonable framework, but the studies will provide valuable information, as well. The key at the end of the day, as Dr. Brailer 

said, is reducing the variability, reducing the complexity, and allowing us to use our resources for direct patient care as opposed 

to trying to comply with this myriad of regulations and making 

these health IT systems much more expensive than they need to 

be. 

Chairman JOHNSON. Ms. Pritts? 

Ms. PRITTS. Well, there are a number of issues that were raised 

here that I would like to address. First, I would like to say that 

there are a lot of providers out there who are dealing with this 

multi-State issue right now and who are doing it successfully, and 

I would hope that as these studies are being taken place, that they 

are consulted and their best practices are taken into account, because obviously, there are some ways that people who have embraced this, the privacy rule, and have looked forward with it have 

been able to function quite well underneath it. I also think that it 

is really important while we are looking at this issue to understand 

how we got to where we are today, which is that we have been unable for the last 25 years to reach significant privacy standards in 

Federal—comprehensive Federal privacy standards in Federal legislation. What has happened is we have a core group of people and 

61 

organizations, covered entities, who are covered by HIPAA, but 

there is this whole other range that is still—and nobody addressed 

this—that there are lots of people in the National Health Information Infrastructure who won’t be covered. 

It is a very—I think it is a very difficult issue when you talk 

about wholly preempting State law. I understand the need to be 

able to exchange health information, but when you are talking 

about health privacy laws at the State level, you know, States have 

been in this business for much longer than the Federal Government has. I mean, traditionally, health, welfare, those are the 

issues that the States—of their citizens States have been legislating, and they have these laws in every nook and cranny in their 

codes and regulations and there are very, potentially, severe consequences of preemption of these laws. So, those consequences 

must be thought of before any action of that kind could even be 

really seriously considered. We are not looking for perfect here, but 

we are looking for protections of individuals. The gentleman, Dr. 

Weiss, said, well, sometimes the good, the common good requires 

the sacrifice of individual freedoms. The problem is, in our country, 

it is the individual who is going to bear the burden of—the cost of 

this in a very—it is not just freedom, it is in a very direct result. 

Our health care system is funded primarily through employers. 

People are afraid that if their health information gets out, somebody in their family has some expensive medical condition, they 

won’t get a job. If they don’t get a job, they don’t get insurance. So, 

it is all interconnected. It all has to be considered within a context. 

Chairman JOHNSON. I think the goal, really, of this discussion 

at this point in the development of further legislation to guide the 

development of a national infrastructure is to begin to be sure that 

we do those studies and we look more carefully at what are the serious differences, what are the non-serious differences, and where 

do we really have to preempt, because it is—and whether we have 

to preempt. I mean, it may be that all the States are doing things 

that we are not doing and they get folded into the national standard. So, this isn’t, do we preempt with the existing standards. This 

is, what do we do about the problem? So, I hope you will be involved in some of those studies. It will be a multi-year process, but 

it is serious enough that to think that the tensions in the future 

between privacy and portability may not have to be resolved differently, I think is to kind of ignore the dynamic that has taken 

place in other parts of the economy. On the other hand, we also 

don’t know how much the capability to protect privacy is going to 

be developed in the technology and it will have a lot to do with our 

ability in fraud and abuse, too. I have taken my time and I am 

going to turn to Mr. Stark. 

Mr. STARK. Thank you, Madam Chair. I want to thank Ms. 

Pritts for, as near as I can tell, the only witness there that has concern for patients and consumers. The pharmaceutical industry is 

well represented and the interests of physicians are well represented, but somehow, it seems to me that somebody ought to 

think a little bit more about what those of us who are patients care 

about our privacy. Some States do a better job. Some States would 

have tougher requirements for a variety of reasons that we might 

not be able to pass at the Federal level. It happens in automobile 

62 

emissions standards. We are much tougher in California than they 

are in North Dakota. So, if we took North Dakota’s emissions 

standards, you wouldn’t be able to see for the smog in big cities. 

I think the same thing could very well be true in various States 

and the standards that would be accepted. Dr. Detmer, you did or 

do represent this vital health statistics national Committee. You 

have worked with them. They have a common set of data elements. 

They have developed a common set of data elements for patient 

records, have they not? 

Dr. DETMER. No, not really—— 

Mr. STARK. They haven’t? 

Dr. DETMER. Not truly, no. 

Mr. STARK. Okay. So, they haven’t developed it? 

Dr. DETMER. Well, they work on this because they are mandated to work on it from the HIPAA legislation, but it is not like 

that has comprehensively been completed. 

Mr. STARK. Okay. Do you think that there is a kind of a minimum set of data, like height, weight, blood pressure, that doctors 

could all agree on that would be sort of a minimal set of statistics 

that they could collect? Do you think we are—— 

Dr. DETMER. You know, this is actually one of those very frequently debated points. Do we go toward a, if you will, minimum 

data set, or do we go toward an infrastructure that really tries to 

capture all of the things that go on. 

Mr. STARK. But you have got to start with the minimum, right? 

Dr. DETMER. I have to admit, I guess I tend to be in the population that say, look, I think that health care today really must 

have the complexities covered, too, because candidly, I practiced 25 

years as a vascular surgeon. The kinds of data I typically needed 

to respond to a patient’s personal needs wouldn’t necessarily come 

up in a general practice kind of environment. 

Mr. STARK. I have got your thing here on standardization—personal identifier, date of birth, gender, race or ethnicity, residence. 

I mean, you guys have agreed on that, right? 

Dr. DETMER. Oh, yes. There is a set of—there are a set of data, 

yes. 

Mr. STARK. That is what I am trying to get. 

Dr. DETMER. I am sorry. Sure. 

Mr. STARK. Okay. So, you guys are all in accord, and you suspect that the medical profession would generally say those are 

okay? They may want more, but—— 

Dr. DETMER. Yes. I think the question is how the process 

works. If there are—— 

Mr. STARK. No, I don’t want to know about the process. I just 

want to know where we are. There are 49 line items here that you 

guys have agreed on, so that is a start. 

Dr. DETMER. Correct. It is a good start, I would say. 

Mr. STARK. Now, the question of interoperability and privacy, I 

would submit to you, either you or Dr. Weiss mentioned credit 

cards and banking, a subject about which, if my memory would 

serve me better, I know a good bit. It is quite possible that the— 

well, the interoperability of the credit card industry and checking 

accounts is a direct function of Federal mandates, okay. The Federal Reserve basically set the standard for clearing, without which 

63 

I could not go into any airport in the world and have the ATM say, 

you are a bum, you don’t have any money and we ain’t giving you 

any more. They know that about me before I get off the plane. The 

privacy and security requirements in Shannon or Heathrow or San 

Francisco or Dulles are all different. Yet we are able to operate 

with an exchange of information. Our privacy standards for financial information are ten times tougher in California than they are 

in the District of Columbia. If my bank were to give out information even to their subsidiary and solicit me for insurance in California, they would be in deep trouble. Not so in many other areas. 

So, I guess what I am suggesting is a couple of things, and I would 

like your comments, Dr. Weiss, if the chair will indulge me with 

the red light a little longer. One, that we are not going to start or 

have interoperability until some one entity that can monitor and 

enforce it says, this will be the standard. Dr. Weiss, you are going 

to have to do it in Florida, right? 

Dr. WEISS. Yes. 

Mr. STARK. Dr. Detmer, wherever you practice. You guys are 

going to have to do it the same way. Now, you can add bells and 

whistles. I would use the case—let us just try it. Dr. Detmer, Dr. 

Weiss, do either of you use, what is that thing, the bookkeeping 

thing, Quicken? Do you use Quicken? 

Dr. WEISS. Yes. 

Dr. DETMER. I know what you are talking about. 

Mr. STARK. Do you use Quicken? 

Dr. DETMER. No, but—— 

Dr. WEISS. I use Microsoft Money, but it is the same thing. 

Mr. STARK. Okay, the same thing. Now, you could hook up to 

your bank or Schwab or some—if you want, and they could import 

your credit card information into Microsoft Money each month, or 

you don’t have to do it. You could balance your checkbook by hand. 

Your bank has a different set of security—you have got to have a 

password—than Microsoft Money. I guess what I am saying is that, 

yes, we could accommodate more sophisticated systems, and I 

would submit that Dr. Weiss’s practice for each individual physician entering information on his or her laptop or whatever input 

device isn’t any different than the thousands of Kaiser physicians 

in my district. They have got a bigger system someplace. But at the 

point of the physician entry, it doesn’t make any difference. I 

guess, if I could get to the point, why shouldn’t we, Dr. Detmer and 

Dr. Weiss, have CMS, for example, say you have got to start with 

this minimum amount of information and this type of electronic reporting or we will pay you less for Medicare and Medicaid, and 

then at least we would get started. Does that—— 

Dr. WEISS. I agree. My fourth option is that as the government 

and the other payers—you have the commercial payers that pay 

one or 2 percent more for physicians who are using an IT system 

that has a minimal set of standards. Those physicians who decide 

to stick with paper rather than technology—— 

Mr. STARK. Get less. 

Dr. WEISS. Will get one or 2 percent less. 

Mr. STARK. Could you live with that, Doctor? 

64 

Dr. DETMER. Yes. I think if you make it revenue neutral, then 

you have dealt with it, too. I mean, I don’t think you are necessarily talking about new money. 

Mr. STARK. Well, we will—your colleagues—— 

Chairman JOHNSON. We have to wrap up pretty quickly, so let 

us add anything in. 

Mr. STARK. Thank you. 

Chairman JOHNSON. I thought the issue that Mr. Stark raised 

about global, basically, variation versus a core of standardization 

is a good one, and if any one of you want to comment on that. In 

our pay for performance bill that we are going to introduce tomorrow, we do have variable payment structures for just that reason. 

Dr. DETMER. No, I agree. It is good. I think that is good. I guess 

the comment I would make is it comes back to the clinical standards issue. I do think the government needs to invest enough to 

really make sure that this process is done and kept up and maintained and so forth, and I think the idea that you think you can 

just sort of do it and then not maintain it is just not going to work. 

Chairman JOHNSON. Right. I agree. 

Mr. STARK. Somebody has got to start it. 

Chairman JOHNSON. Yes. 

Ms. KLOSS. I would also follow on to our earlier discussion on 

certification of EHRs. The approach being taken is to set forth 

some fundamental standards for functionality, security, interoperability, and to go from there so that at least we know that all 

EHRs meet that basic set of standards. So, I think that is a sensible way to proceed. 

Chairman JOHNSON. Mr. Hulshof? 

Mr. HULSHOF. Thank you, Madam Chairman. I will try to be 

brief. Just a couple of quick comments. A lot of discussion about 

HIPAA, which the standards were intended to be a minimum privacy standard and yet sometimes, as is the case, at least in my experience, has been that State laws are not necessarily more stringent. It is just that they are different and, therefore, you have entities having to comply with two completely different sets of standards and one may not be more rigorous than the other. So, that is 

one comment I would make. Let me commend everyone for the 

written testimony. There is some great stuff, and I know when you 

are trying to pare it down into a five-minute presentation, a lot of 

good things get missed, and I would just commend everybody to 

take all of your written testimony. I wanted to emphasize a point, 

Ms. Pritts, you made in yours, that you cite in your written testimony a number of instances in which medical information was 

sold. Isn’t that already prohibited under HIPAA? 

Ms. PRITTS. Well, it is prohibited under HIPAA, but what has 

recently happened is the Department of Justice issued guidance to 

HHS saying that the criminal provisions of HIPAA do not apply to 

most employees, even of covered entities. So, if you had—the example in my testimony says, if you had a hospital and the hospital 

will have policies in place saying you may not sell patient information, that the hospital is not going to be prosecuted under HIPAA, 

and rightfully so, because it is not the one selling the information 

improperly. The employee who is improperly taking patient information and selling it is not going to be prosecuted under HIPAA 

65 

because the Department of Justice has announced they are not covered by HIPAA. 

Mr. HULSHOF. Let me emphasize another point that Dr. Weiss 

made, because again, in your testimony, you talk about privacy. We 

have been talking a lot about privacy of medical records. But again, 

Dr. Weiss, thank you for just reminding us that, really, the electronic environment, though not perfect, as you write on page five 

of your testimony, is better and safer than the paper environment. 

Right now, anyone in the hospital can pick up a medical chart, 

browse through it anonymously, whereas on electronic records, you 

have access—if you have access, you can then call up and see who 

exactly accessed your information based on privacy. So, again, 

thanks for those real world examples. Now, Dr. Weiss, in the remaining time I have got, let me ask you this. Can you describe how 

an exception to the physician self-referral laws and the anti-kickback statute would actually increase adoption, or would it increase 

adoption of health IT among your physicians, because here is the 

concern that we have heard from some. Some would argue that 

maybe a safe harbor like this would create a situation in which 

hospitals would compete for physicians based on IT spending, or 

they might create these captive referral systems between physicians in certain hospitals. So, can you respond to that generally, 

and I will yield you the remaining balance of my time. 

Dr. WEISS. Thank you. I will start with a real story that is happening as we speak, where we have 525 physicians on staff. We 

have a group of 55 physicians in town who are wonderful. We have 

another group of 40 physicians who focus on an indigent care market. About 18 months ago, these other two small groups were out 

to buy an IT system. I spent a significant amount of time and energy, as did they, to see if we could get interoperability among the 

systems. I was advocating that they use the hospital system, which 

is relative mature. We are not quite a paper-free environment, but 

we are heading that direction. During that period of time, these 

two physician groups had three concerns that actually never happened. They ended up buying two excellent systems, but not the 

same system the hospital has right now, so basically we all have 

romance languages but we are not speaking to each other. We are 

doing French, they are doing Italian and Portuguese or whatever. 

So, we sort of understand, but at the end of the day, we have got 

to print everything, carry it to and from. 

They can read our system anywhere that they have high-speed 

Internet connection, but they can’t get from their system to our 

system, and so if a patient gets a lab result earlier in the day in 

his or her doctor’s office and gets admitted to the hospital later in 

the day, we will repeat the blood test because it is too hard to get 

the results. Now, what actually happens and gets to the regulation 

question, we looked at the new Stark laws. As a private practitioner, I understand the temptation of self-referral and self-inducement and I applaud those rules. That really does make a difference. There are a small minority of physicians who take advantage of patients economically and do self-referral and the law has 

been a great law. The actual practicality of it is, when we thought 

about trying to help physicians, of our 525 physicians, 200 admit 

patients commonly in the hospital. That leaves 325 whom we would 

66 

have to pay for computers for their offices who really aren’t associated. There are another 300 physicians in the community who don’t 

use our hospital, so that we don’t have the money—we have about 

a three percent profit margin, we are a not-for-profit communitybased hospital and we are doing fine and we reinvest all our 

money, but that is not the highest—we can’t buy computer systems 

for 800 physicians. It is just practically not economically possible. 

Then we have one other hospital in town and we have a third 

hospital who will be probably coming to town. The physicians were 

worried about, number one, the hospital’s IT department’s ability 

to implement IT or computer systems in his or her office, and being 

on the provider side before, no offense to government, but it is the 

‘‘I am from the government, I am here to help you.’’ We say, ‘‘I am 

from the IT department of the hospital, I am here to help you,’’ and 

it makes you a little bit worried. So, that the doctors were worried 

about our ability, and our ability is great, but we are used to working inside the hospital. So, the first thing was the ability to make 

it happen. The second thing was, as an individual physician, they 

were worried about being married, having—monogamous relationships are necessary for healthy marriages, but not for businesses, 

so that they wanted to be able to be involved with the other two 

hospital systems in town and not be married to one hospital. If I 

were in individual practice the way I was before 2000, I certainly 

wouldn’t want to be married to one system. 

The third thing—and the third major point was it just economically wasn’t feasible for us to do that, so that even though the rule 

was relaxed somewhat, it is just not practical. What we really need 

is the health care industry as an industry to do integration, to do 

it voluntarily. Right now, I sort of have the idea that everyone 

wants to become like Microsoft when Commodore and Apple were 

involved. But really, if you go back to the Sony and VHS in 1975 

to 1980, the group that won out was the group that cooperated. The 

VHS won out because they gave their technology to other people. 

The group that lost, even though Sony had a two-year lead and arguably a better product, never made it because they didn’t connect 

and collaborate. They tried command and control. In our environment in 2005, command and control does not work. Connect and 

cooperate does. Thank you. 

Chairman JOHNSON. Thanks very much. What I hear you saying is that once sort of the standards are set so that there isn’t this 

worry about the monopolistic relationship and we have a greater 

flexibility than the Committee-wide exception, that then those 

things could have happened and the outcome for the public and for 

the patient would have been far better. I thank the panel very 

much for their testimony today. It was very, very helpful and very 

specific. We appreciate it. As we move forward, we will look to call 

on you for your advice and input. Thank you. The hearing stands 

adjourned. 

[Whereupon, at 12:28 p.m., the hearing was adjourned.] 

[Submissions for the record follow:] 

Statement of James Bayot, McKesson Corporation, 

San Francisco, California 

For more than 170 years, McKesson has led the industry in the wholesale delivery 

ofmedicines and healthcare products. Today, a Fortune 15 corporation, McKesson 

67 

delivers vital pharmaceuticals, medical supplies, and healthcare IT solutions that 

touch the lives of more than 100 million patients in every healthcare setting. As the 

world’s largest healthcare services company with a customer base that includes 

more than 200,000 physicians, 25,000 retail pharmacies, 5,000 hospitals and 600 

payers, McKesson is well positioned to help transform the healthcare system. 

McKesson strongly supports the goal of improving healthcare quality by using 

healthcare information technology (IT) to reduce medical errors and lower costs. As 

the largest provider of automation and information technology in the healthcare industry, we deliver innovative technologies at each point in the healthcare system 

to reduce medication errors, lower costs, and improve the quality and efficiency of 

healthcare. We are dedicated to making healthcare safer, a goal that requires a deep 

understanding of healthcare delivery processes and a clear focus on what is required 

by key stakeholders such as physicians, nurses, pharmacists and patients. 

McKesson fully supports the President’s goal that every American should have an 

electronic health record (EHR) in 10 years. To meet this bold vision, McKesson believes that the federal government should pursue a two-pronged strategy to spur the 

adoption of automation and healthcare IT. First, we need broad deployment today 

of high-impact technologies that provide unquestionable benefits in the delivery of 

healthcare. Second, on a parallel track, we need to develop the standards and promote the interoperability of systems that are essential for medical information to 

be shared among healthcare providers, patients, and public health agencies in a 

safe, secure manner. 

At McKesson, we know that technology itself is not the inhibitor of change in the 

healthcare system. The technology is available and working. It is intolerable that 

people die every day from medication errors that could be prevented with bar-code 

technology, the same technology that is used in every major retail outlet in this 

country. We conduct sophisticated banking and other business transactions electronically across continents; yet most physicians in the United States still rely on 

their memories for complex medical information, and write orders using pen and 

paper. 

While deployment of healthcare IT is growing, less than 20 percent of hospitals 

in the United States today use bar-codes to verify the administration of patient 

medications, and fewer than 10 percent of physicians in hospitals enter patient prescriptions and medical orders electronically. The numbers are only slightly better 

outside the hospital: only about 25 percent of large physician offices enter their prescriptions electronically. The number drops considerably for small physician practices. 

Three Areas Where High-value, High-impact Technologies Already Make a 

Difference 

We can and must make the healthcare system safer and more efficient by accelerating the use of technology in all hospitals and physicians’ offices in the United 

States. There are three areas where high-value, high-impact technologies already 

make a significant difference: 

1. Bar-code technology. Medications should be packaged in unit-doses labeled with bar codes and scanned at the bedside before they are given to patients. Today, on average, there are 27 steps in the medication use process that involve many decisions, multiple handoffs and various people, ranging from the physician who prescribes the order to the pharmacy staff to the nurse who ultimately administers the medication to the patient. Healthcare IT and automation can reduce 

the handoffs and eliminate, on average, 40 percent of the steps. This results in dramatically improved accuracy, efficiency and safety. In a group of 75 hospitals that 

use McKesson’s bedside bar-coding technology, 400,000 ‘‘alerts’’ are triggered weekly 

to nurses or other healthcare professionals to advise them that the wrong medication or incorrect dosage is about to be administered. As a result of these on-line 

warnings, we estimate that these hospitals prevent 56,000 errors each week. Hospitals that deploy bar-code scanning technology report dramatic error reduction in 

medication administration, as high as 90 percent. 

2. Electronic prescriptions. We must eliminate paper prescriptions. Each 

year, more than three million preventable adverse drug events occur in physicians’ 

offices or other out-patient care settings. Imagine a world where a patient’s list of 

current medications is available to the physician and the physician can order initial 

scripts or refill them online. All the medication names would be legible, and all orders checked for drug-drug interactions and allergies. Today, McKesson’s systems 

help to ensure safe prescriptions are written and filled 100,000 times each month, 

but, nationwide, 80 percent of prescriptions are still on paper, and many are illegible. 

68 

3. Secure Web-based access to patient information. We must equip physicians and clinicians with the information needed to make informed decisions about patient care. Today, most healthcare is delivered in a paper-based 

world. It is not uncommon for physicians to provide patients with advice, give directions to other staff and recommend treatment changes without any access to a patient’s chart. These blind encounters happen every day. Secure Web-based access to 

clinical patient information, such as laboratory results, the patient’s medical record 

and diagnostic images, enables physicians to find, within seconds, the information 

they need to make more informed decisions and initiate or adjust treatment. 

McKesson currently records 1.8 million logins each month to its Web-based physician portal, almost double compared to a year ago. Remote access via Web portal 

technology is in common use across many industries; yet, in healthcare, its deployment is only in the 50—60 percent range. 

Funding to support these focused initiatives can lead to dramatic progress very 

quickly. McKesson applauds the leadership shown and initiatives undertaken by the 

Congress and this Administration. Implementing these three forms of technology 

will build the required momentum and provider support for adoption of healthcare 

IT. 

Technology is Improving Healthcare Quality Today 

Healthcare technologies today save lives, reduce medical errors, improve the quality of care, and reduce overall health costs. The following healthcare organizations 

are just a few of our customers that have taken these important first steps to improve care for their patients: 

Concord Hospital, an affiliate of Capital Region Health Care (CRHC), Concord, NH: Concord was one of the first hospitals in the United States to introduce 

bedside bar-code scanning of medications in 1994, which reduced its already low 

medication error rate by 80 percent. This reduced error rate, which has been sustained for more than 10 years, has improved productivity and efficiency as well as 

increased clinician satisfaction and retention. 

Medical Associates Clinic, Dubuque, IA: Medical Associates is deploying an 

ambulatory electronic health record and e-prescribing system for more than 100 

physicians and medical providers, which represent 30 specialties dispersed across 16 

locations in three states. With the implementation still underway, physicians are already entering 26,000 e-prescriptions each month, and patient information is available electronically regardless of location. Nurses spend far less time on medication 

management; they have reduced the time spent on paper charting activities by 24 

percent; and, they spend 16 percent more time with patients and their families. In 

addition to improved quality and better decision-making, this clinic projects an 

annualized net gain of $1.7 million with full system deployment. 

Regional West Medical Center, Scottsbluff, NE: A regional referral center covering more than 12,000 square miles in rural Nebraska, Regional West has used information technology to streamline the delivery of healthcare. Through secure Internet access, physicians and other clinicians can view a single electronic medical 

record for each patient, which includes diagnostic medical images, pharmacy data 

and laboratory results. A McKesson pharmacy robot dispenses bar-coded, unit-dose 

medication packets virtually error-free. Electronic patient charting at the bedside 

has cut nurses’ daily paperwork by nearly 1.5 hours, enabling them to spend more 

time caring for patients. The hospital has reduced its medication error rate by 30 

percent to less than one percent. Before giving a medication, the nurse must capture 

a three-way bar-code match between his/her badge, the medication and the patient’s 

wristband to check the five ‘‘rights’’: the right patient is receiving the right dose of 

the right medication at the right time via the right route. 

Mary Lanning Memorial Hospital, Hastings, NE: The largest employer in 

Hastings, Nebraska, Mary Lanning Memorial Hospital has served the healthcare 

needs of the surrounding community for the past 83 years. Although the hospital’s 

medication error rate was low, a single tragic event highlighted the need for standardized medication administration. Bedside bar-code scanning technology was implemented along with a pharmacy information system to reduce the risk of medication 

errors. Additionally, medications scanned at the bedside are compared to orders reviewed by pharmacists and screened for allergies, interactions and therapeutic duplications. Preliminary data has shown a 35 percent increase in the reporting of 

near-miss events related to wrong drug and wrong patient. 

Presbyterian Healthcare Services in Albuquerque, NM: Using McKesson’s 

bar-code technology solutions, Presbyterian reduced medication administration errors by 80 percent. Technology has also allowed pharmacists to be redeployed to 

critical care units to work directly with patients and physicians and enhance the 

quality of care. 

69 

These innovative health systems and others across the country are saving lives 

and saving money. Physicians, nurses, and pharmacists now spend more time interacting with patients and less time performing administrative functions. More importantly, these organizations are creating a new baseline for patient care in the 

United States. While making healthcare safer through seamless, rapid and accurate 

information flow, they are also addressing one-third of healthcare’s overall costs: administrative paperwork, clinical errors, manual hand-offs and rework. 

Developing Standards and Promoting Interoperability 

McKesson fully supports efforts of Congress and the Administration to facilitate 

standards harmonization, encourage the formation of regional health information organizations and establish a National Health Information Network. Development of 

the requisite technology standards will allow the computer systems of doctors, hospitals, laboratories, pharmacists and payers to efficiently communicate and share information. We are honored to work with Dr. David Brailer and the Office of the National Coordinator for Health Information Technology as he moves to create a foundation for the transformation of our healthcare system. We are also pleased to be 

a member of the Commission for the Certification of Health Information Technology, 

a collaborative public-private partnership to develop standards and certify health information technology systems. 

We all remember the incremental steps that were taken by other industries as 

they moved towards connectivity and interoperability. First, they automated individually and then, collectively, they collaborated to connect the information. Consider 

the banking industry. A full decade elapsed between the early proliferation of bankspecific automatic teller machines (ATM) and the formation of ‘‘shared ATM networks’’ in the 1980s. Once the automation was complete, connectivity and interoperability occurred very quickly. In the interim, banks were able to realize the cost and 

efficiency savings of ATMs, and consumers, appreciating the convenience of ATMs, 

quickly adapted to this new banking system. Connectivity is a natural evolution of 

automation. We are confident the same evolution will happen in healthcare. Once 

our nation’s healthcare providers are fully automated, it will be possible to connect 

previously isolated healthcare systems. 

Understanding and Overcoming Barriers to Rapid Adoption of Health Technology 

The biggest obstacle to healthcare information technology adoption is securing the 

needed funding and resources. Today, physician practices and hospitals do not have 

access to the capital necessary to invest in their own technology or, on a larger 

scale, to fund connectivity. 

The federal government can play a key role in financing this healthcare transformation through creative funding arrangements. One option is through the creation of Government Sponsored Entities, which would provide indirect federal support through guaranteed loans for healthcare providers to purchase, adopt, and implement proven health technology solutions that are focused on error elimination 

and safety. Coupled with the pay-for-performance initiatives that reward providers 

for the quality of healthcare delivered rather than for services rendered, guaranteed 

loans or other financial incentives will spur technology adoption. 

A combination of financial and performance incentives would help mitigate the 

initial expense of technology implementation. The reduction in medication errors 

and improved efficiencies in delivering improved healthcare will also provide a return on investment for healthcare organizations, thereby enabling them to repay the 

loans. 

Conclusion 

McKesson believes our healthcare system must adopt and deploy proven technologies today that reduce medical errors in order to save lives, improve the quality 

of care, and reduce costs. These initial steps should include: 

1. Implementation of bedside bar-coded medication administration systems across 

the United States. 

2. Elimination of paper prescriptions through use of e-prescribing in physicians’ 

offices. 

3. Secure, online, ‘‘anytime, anywhere’’ access for physicians to critical patient information. 

Automated information will enable our healthcare organizations to store and collect patient data, which will ultimately lead to a comprehensive electronic health 

record. Concurrently, we need to adopt the standards necessary to ensure interoperability among systems that will facilitate communication within our health system. 

If we execute these initiatives simultaneously, McKesson strongly believes that this 

70 

1 Chute, et al, http://www.jamia.org/cgi/content/abstract/3/3/224 The second content coverage 

study was done in the summer of 2004 and is not yet published, but the findings are very similar to the 1996 study. 

Congress and this Administration will be able to deliver visible and measurable results with a lasting impact on the quality of healthcare for the American public. 

As a nation, we have both the will and the means to transform healthcare for the 

better. This will be a remarkable legacy, and one we should act on today. 

We appreciate the committee’s interest in healthcare information technology and 

look forward to working with members of the Subcommittee on Health, as well as 

other Members of Congress, to address these critical issues. 

f 

Statement of Patricia Gibbons, Mayo Foundation, Rochester, Minnesota 

OVERVIEW 

The proposal to move to the ICD–10–CM/PCS (International Classification of Diseases, 10th Edition, Clinical Modification and Procedure Coding System, hereafter 

referred to as ICD–10–CM) should to be coordinated with other legislative and regulatory initiatives having to do with the use of standard terminologies for the reporting of clinical information. These include pay-for-performance and quality reporting, 

the public interest in encouraging the use of SNOMED for the improvement of clinical description, and the establishment of a standards-based national health information network (NHIN). The NHIN should include a roadmap for the adoption of 

terminologies if true interoperability is to be achieved. If the various terminology 

initiatives can be synchronized, it will be possible to realize improvements in health 

care diagnosis, quality, safety and treatment, along with significant cost savings, for 

the benefit and well-being of all Americans. 

CURRENT SITUATION 

Neither ICD–10–CM/PCS, nor its predecessor currently in use, ICD–9-CM, allow 

for the capture of data at the detailed level that is required for the identification 

and description of case types (groups of patients with a similar diagnostic profile) 

as specified by most quality measures. Such case types and the optimal interventions prescribed for them are now defined by a combination of ICD–9-CM codes plus 

additional clinical information, much of which cannot be coded at an appropriately 

detailed level in ICD–9-CM or in ICD–10–CM/PCS. In contrast, SNOMED (the Systematized Nomenclature of Medicine), which has been identified by the NCVHS 

(The National Committee on Vital and Health Statistics) and by CHI (the federal 

Consolidated Health Informatics Initiative, now part of the Federal Health Architecture project) must be considered the preferred terminology for the expression of clinical information. SNOMED has been shown to be able to handle this level of detail, 

in two studies on content coverage performed at Mayo Clinic.1

SNOMED contains the detail needed for the 1) billing and reimbursement, 2) national health statistics and public health reporting, 3) the real-time measurement 

and reporting of safety and quality measures, and—most importantly—4) the precise characterization and recording of information about all medical diagnoses, findings, treatments, and events by care providers, as they occur. 

Important work is currently underway by the National Library of Medicine, in collaboration with HL7, the leading standards development organization for health 

care, to accomplish the translation of SNOMED codes into ICD–9-CM codes. A similar translation (or mapping) is planned between SNOMED and ICD–10–CM. A mapping already exists, as well, between ICD–9-CM and ICD–10–CM. Work remains to 

be done. Completion of these mappings should be expedited, tested, and adjusted 

to assure continuity in moving forward. But that alone is not adequate to achieve 

the potential benefits of the synchronization. Additional, supportive standards for 

the specification of clinical statements and templates for clinical documents, under 

development by HL7, complete the array of standards needed to support SNOMED 

to ICD synchronization. 

The Centers for Medicare and Medicaid Services (CMS) and the National Center 

for Health Statistics (NCHS), which are today the leading users of ICD–9-CM-coded 

data must play a critical role in providing and maintaining for general use, a single 

approved, computer-based mapping of SNOMED to ICD–9-CM and to ICD–10–CM. 

This mapping should allow organizations, including providers, payers, and other 

stakeholders, to ‘‘capture the data once,’’ store it as SNOMED expressions, and 

71 

2These numbers are derived from the graphic in the published study. See actual study for 

precise results. 

produce from it all ‘‘derivative’’ information (such as ICD codes for reimbursement, 

and for statistics and public health reporting). 

TERMINOLOGY NEEDS FOR QUALITY AND SAFETY 

Quality indicators and patient safety measures, now characterized by a cumbersome mixture of ICD–9-CM codes plus other data, can be better and more consistently captured by SNOMED. If ICD–10–CM is implemented without coordination with SNOMED, a major recasting of indicators into ICD–10–CM terms will still 

need to be done and calibrated. All indicator-related data not currently encodable 

into ICD–9-CM will need to be scrutinized for codability in ICD–10–CM, and much 

of the information will still need to be gathered manually, with different processes 

for different indicators On the other hand, if SNOMED is specified as the basic nomenclature for reporting of quality indicators, all detailed clinical data needed can 

be characterized using SNOMED, since SNOMED can handle the content of both 

the ICD–10–CM codes and the additional data required for quality indicator reporting. Not that every element of information available in SNOMED will always be in 

use, but if a new measure or finding is required, it will be there. By way of analogy, 

SNOMED will provide a complete dictionary, and grammar, for composing any sentence, whereas today we have no more than a list of pre-formed and pre-selected 

‘‘sentences’’ to choose from. 

To understand this better, let us look at the findings of the first content coverage 

study from 1996 which compared SNOMED with ICD–9-CM and ICD–10–CM. 

‘‘Content coverage’’ is the relative ability to describe full clinical content, including diagnoses, findings, prescriptions and drug information, procedures and other 

information. It includes the ability to modify these expressions in various ways 

(from ‘‘stages’’ of cancer, to degrees of certainty, to modifiers such as ‘‘family history 

of,’’ ‘‘history of,’’ ‘‘exposure to’’). The versions of SNOMED and ICD–9-CM that were 

in available at the time were used in the study. Plus, there was a draft version of 

ICD–10–CM available that was used in the study. The approximate results from the 

1996 study are tabulated below: 2

ICD–9-CM ICD–10–CM SNOMED 

Diagnoses 1.61 1.61 1.92 

Findings 1.22 1.24 1.82 

Modifiers 0.38 0.41 1.71 

Other 0.55 0.79 1.52 

Procedures/Rx 1.01 1.09 1.79 

OVERALL 0.81 0.84 1.75 

Figure 1. Scores by semantic group for major coding systems. Bar graph of mean scores over all concepts 

within each semantic domain and Overall. The scale is based on a 0—2 integer scaling reflecting a subjective 

measure of concept capture. 0 = absent, 2 = complete. 

The two content coverage studies show that, despite structural changes and a 

switch to alphanumeric codes (which theoretically add much expandability to the 

coding system), ICD–10–CM/PCS does not increase content coverage in a major way. 

Overall, both the 1996 and the 2004 studies show similar content coverage for ICD– 

9-CM and ICD–10–CM/PCS. Content coverage for SNOMED is roughly twice that 

of either version of ICD. 

There are several reasons these studies do not show a significant increase in content coverage between ICD–9-CM and ICD–10–CM: 

1. The study looked at actual histories, and although there are some new diseases 

and procedures, these typically occur in low volumes; once they are recognized, they 

are added to ICD–9–CM (or–10 or SNOMED) in regular or special updates. 

2. Many of the changes in ICD–10–CM/PCS are changes to the internal way codes 

are handled, rather than the addition of new codes. There are some additions that 

are very helpful, such as the ability to indicate ‘‘right,’’ ‘‘left’’ or ‘‘both,’’ but in many 

cases, it is the old pie that is being cut up. 

3. ICD–10–CM is largely a recasting of major two types of clinical knowledge, 

major diagnosis and interventional procedures, which is also captured by ICD–9- 

CM. 

72 

3http://www.snomed.org/snomedct/documents/July05—CT—FactSheet.pdf 

4 Information on SNOMED inclusions and mappings to other coding systems (including 

LOINC for lab values and various nurse activity coding systems) is provided at: http:// 

www.snomed.org/snomedct/documents/July05—CT—FactSheet.pdf 5 NOS means ‘‘Not otherwise specified.’’ ‘‘NEC’’ means ‘‘Not elsewhere classified.’’ In short, unusual, uncommon, and—importantly—new conditions, such as SARS or avian flu, are first likely 

to be lumped into one of these ‘‘other’’ categories, until their correct etiology or expression are 

better understood. For reimbursement or statistics this tends to work reasonably well. A new 

type of flu will end up in ‘‘other influenza,’’ for instance, and so be counted and reimbursed in 

a reasonable manner. 6 It must be emphasized that the ICD–10–PCS, Procedure Coding System, is not based on any 

ICD mortality coding system, but was developed under contract by 3M for CMS. 

In general, the scope of ICD–10–CM/PCS has not broadened to include the range 

of detailed clinical information covered by SNOMED.3

SNOMED, on the other hand, shows particular strength of content coverage precisely in those areas central to the measurement of clinical quality and safety: detailed findings and clinical modifiers. All-in-all, SNOMED outperforms either ICD– 

9-CM or ICD–10–CM/PCS by a margin of nearly two to one. This of profound importance when it comes to the specification, collecting, and reporting of quality measures—if what we mean to do is, truly, to create the foundation of a new generation 

of medical knowledge which can serve as the foundation for major new improvements 

and advances in patient care and public health. 

ICD–10–CM provides limited specificity regarding lab findings, non-billable procedures (such as many nursing activities) and pharmaceuticals. SNOMED either 

maintains links to such information or has developed it internally.4 Plus SNOMED 

has a vision and flexible structure which allows for entire new dimensions to be 

added in the future. 

CHARACTERISTICS OF THE ICD CLINICAL MODIFICATIONS 

Although ICD–10–CM allows for greater extensibility (the ability to add more 

codes in many areas), it remains unchanged in two respects. It is designed for aggregation and/or classification. It retains use of ‘‘NOS’’ and ‘‘NEC’’ codes.5 This 

means that it gathers similar diagnoses into common groupings. Sometimes, these 

‘‘groupings’’ represent a single clinical expression, but not always, and not fundamentally. The ICD Clinical Modifications have done a reasonable job of serving 

the functions for which they were designed, statistical reporting, case retrieval for 

study, and, more recently, reimbursement. 

But, to handle the new proliferation of quality indicator reporting, neither ICD– 

9-CM nor ICD–10–CM/PCS have the detail, the structure, or the ability to adapt 

to foundational changes to its underlying assumptions; it will still be possible to run 

out of codes. With genomic data rapidly being linked to symptoms and diseases and 

with the promise of an ever-changing but always growing set of requirements for 

detailed and ‘‘subtle’’ quality criteria (‘‘nonbillables’’), any fixed classification system 

will be short-lived. Indeed, ICD–10–CM is based on the First Edition of ICD–10, and 

the Second was introduced last year, along with a whole new user interface technology. If history is to be the guide, ICD–11 is due out in the next few years, and 

is expected to be more SNOMED-like in its design. Indeed, ICD–10–PCS, the Procedure Coding System (to be used for inpatient procedures only; it does not replace 

CPT), a thoroughly U.S.-developed system—uses a SNOMED-like approach.6

It is indeed most commendable that AHIMA, which has 40,000+ members involved largely in the coding of medical information into the ICD, CPT and related 

families of coding systems, is now voicing its strong support for the mapping 

SNOMED to ICD–10–CM as part of a coordinated strategy in the direction of adequate, ‘‘capture once, use many times’’ clinical description capability. This is a significant step forward. There is every reason to believe that these talented professionals will continue to play a key role in the future of all aspects of clinical information capture. 

RECOMMENDATIONS 

The following two measures are required in order for the United States to move 

forward to a detailed, flexible, and clinically useful system for characterizing health 

related conditions, findings, interventions, and events: 

1. CMS and NCHS should provide, for general use, a mapping between SNOMED 

and both ICD–9-CM, and ICD–10–CM/PCS 

2. CMS should require that all data specified for the reporting of newly mandated 

safety and safety measures should be submitted in SNOMED terms 

73 

7 Indeed, the fact that ICD only allows a condition to be assigned to one category is considered 

a valuable feature for purposes such as classification and grouping for reimbursement, in reality, conditions often have multiple characteristics and other aggregations may also be useful, 

not only for research, but also for practice. A bacterial infection of a heart value is both a heart 

condition and a bacterial infection. Metastatic liver cancer is not only a cancer but has multiple 

sites that may be characterized. SNOMED handles this kind of multiple characterization much 

more easily than do the ICDs. 

Designated Mapping between SNOMED and ICD–9-CM and ICD–10–CM 

CMS and NCHS must help develop, certify and provide for use, an approved mapping of SNOMED codes to ICD–9-CM and ICD–10–CM. It is surely possible that 

more than one roll-up will be possible given the ‘‘multiple inheritance’’ capability of 

SNOMED.7 Work is progressing on the mapping of SNOMED to ICD–9-CM, in the 

joint initiative of the NLM and HL7. Work should begin as soon as possible on ICD– 

10–CM as well. A mapping to ICD–10-PCS may also be considered, although it is 

not a necessary part of the diagnosis cross-mapping. 

CMS and NCHS should, as well, take on the necessary calibration work to assure 

that in terms of payment and statistics, the disease profiles which result from the 

mappings to ICD–10–CM are consistent with those derived from ICD–9-CM. Not all 

health care organizations will be able to go to use of SNOMED at the outset and 

will likely prefer a more straightforward move to coding into ICD–10–CM. Provider 

organizations that want to move to automated problem lists which can be used directly by care providers and which can be linked to clinical advice/alerts and medical literature (creating the full cycle of evidence-based medicine), can be expected 

to enthusiastically embrace SNOMED-based problem lists. These organizations 

should be assured that any potential decreases in reimbursement due to the ability 

to provide additional detail should be neutralized initially and factored in over time. 

A potential source of revenue for handling any such gaps can be expected from decreases in ‘‘fraud and abuse,’’ which can result from differences in coding conventions between payers and providers. With a system based on SNOMED-level detail, 

disagreements over which category (ICD code) a condition should be assigned to will 

be eliminated by the explicit use of the actual description of the condition as the 

primary data entity. Only consequently will this detailed diagnosis be assigned—by 

means of a CMS-approved mapping—to an ICD-level category. Actual abuse will be 

actually documented and furthermore, will be internally testable, for instance, by 

the ability to compare a SNOMED-coded diagnosis with a SNOMED-coded lab result to see if they are consistent. Systems will naturally evolve which internally 

check to assure that such inconsistencies are noticed and attended to. 

Requiring Quality Indicators to be Submitted using SNOMED 

SNOMED has been designated by CHI as the preferred standard for use for most 

clinical reporting, and is mapped to LOINC and several nursing terminologies. In 

short, SNOMED contains the level of detail needed for the direct encoding of the 

details needed for the reporting of quality indicators. Neither ICD–9-CM or ICD– 

10–CM/PCS are capable of capturing this level of detail nearly as well as SNOMED. 

SNOMED, is based on a natural ordering, or ontology, which reflects the natural 

relationships among health-related entities (states of health and disease, symptoms, 

findings, events, interventions, medications, and all types of interactions with care 

providers). And it has the flexibility to be changed as the understanding of these 

relationships change—as they are certain to do, given the rapid advancement and 

restructuring of medical knowledge 

ADDITIONAL BENEFITS 

Major new benefits and ‘freedom of (clinical) expression’ will result from adopting 

this approach. Provider organizations will be free to implement EHR systems which 

use SNOMED as the foundation of all their information needs, enabling them to 

provide the highest quality patient-oriented care. Systems of medical advice and online access to medical knowledge, for patients and care providers alike, will be enhanced; and active quality and safety management can be integrated into systems 

rather than patched onto them. And yet it will still be possible for providers to submit the financial and administrative data required of them—only with less bureaucracy and duplication of effort, and a real savings of consumers’ and tax payers’ dollars. For years we have been moving deliberately to this new vista, and so many 

of the initiatives are ready to bloom. There is every reason to believe that we are 

at the verge of the emergence of the long-anticipated ‘‘common language of mediVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00077 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
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1The MRHIS is the information system which originates with data in the medical records of 

hospitals and physicians’ offices. It must first meet the needs of the physician as a memory and 

communication tool in care of the individual patient. Some medical record content is then used 

to support billing and to create statistics on health and healthcare. 2Output codes are codes which represent the labels of the categories of a classification which 

has been constructed for statistical purposes. Each diagnosis output category (code) contains a 

collection of the individual diagnoses which are its input. In both ICD–9-CM and ICD–10–CM, 

several hundred thousand specific diagnoses are collected into the few thousand categories of 

the classification. Most individual diagnoses, therefore, have no unique codes. 3 Input diagnosis codes are codes which exactly represent diagnosis entities as expressed by 

the physician. The physician may or may not record a diagnosis using its ‘‘preferred term;’’ he 

may or may not even use a standard synonym. Following input, the computer system will add 

the ‘‘standard code’’ for the preferred term in order to facilitate finding it in all medical records. 4LOINC—Logical Observation Identifiers, Names, and Codes. 

cine’’ which can make the new era of ‘‘collaborative health decision-making’’ a reality 

rather than a dream. 

f 

Statement of William Hogan and Vergil Slee, The Rods Laboratory 

(at the University of Pittsburgh), Pittsburgh, Pennsylvania 

SUMMARY 

It would be a mistake to switch from ICD–9-CM to ICD–10–CM in the Medical 

Record Health Information System (MRHIS) 1 at the present time. 

The resource expenditure required would present an unnecessary, perhaps insurmountable, obstacle to the efforts of the federal government to modernize the 

healthcare industry with information technology (IT), most especially the adoption 

by physicians of the electronic medical record (EMR). 

The claim that implementing ICD–10–CM is critical to biosurveillance for such 

threats as SARS and avian influenza is inaccurate—the public health reporting system does not use ICD–9-CM codes for this purpose. 

The basic problem that the healthcare system and the federal government need 

to address is that there is no standard set of codes for diagnosis INPUT. Our system 

is obsolete. It uses diagnosis OUTPUT codes 2 for diagnosis INPUT —both ICD–9- 

CM and ICD–10–CM are OUTPUT codes. 

Instead of switching to ICD–10–CM, we should develop and implement a modern 

system for diagnosis INPUT3 No system for this purpose exists today. 

OUR CREDENTIALS 

Willian Hogan, MD, MS is an Assistant Professor of Medicine in the School of 

Medicine of the University of Pittsburgh and a senior analyst in its Realtime Outbreak and Disease Surveillance (RODS) Laboratory. RODS carries out research 

under funding from DARPA, CDC, NLM, DHS, AHRQ, and NSF. Hogan has extensive experience in building biosurveillance systems, as well as conducting basic biosurveillance research. Prior to joining the RODS Laboratory in 2002, he worked at 

Health Language, Inc, where he gained expertise with vocabulary standards including ICD–9–CM and SNOMED. He is the expert on vocabulary standards at the 

RODS Laboratory, and led the effort at the RODS Laboratory to map proprietary 

codes used by eight hospital laboratories to LOINC 4 and SNOMED CT for electronic 

laboratory reporting. He has written on vocabulary standards, biosurveillance, and 

the intersection of the two. 

Vergil Slee, MD, MPH, FACP, FACHE (Hon) was responsible for the first deployment of ICD in hospitals as a tool for diagnosis indexing, a task for which ICD was 

admirably suited at that time (1955). In 1975 he represented the U. S. at the WHO 

conference which designed ICD–9. In 1976 he became President of the Council on 

Clinical Classifications which, in collaboration with the U. S. National Center for 

Health Statistics, developed ICD–9–CM (1978). He has analyzed ICD–10–CM (Reference 6) and has written extensively on the expanding demands on medical record 

information (Reference 7), demands which have destroyed ICD’s suitability for diagnosis input. 

75 

5 NOTE RE PROCEDURE CODING: Proponents of the switch to ICD–10–CM imply that it 

would also require the switch, for hospital inpatient records, from Volume 3 of ICD–9–CM to 

ICD–10–PCS (which was written by 3M under contract from HHS). Procedure coding is a separate issue from diagnosis coding. No simultaneous switch is necessary; the system could stay 

with the present procedure coding or consider the procedure coding available with SNOMED CT 

(Standardized Nomenclature of Human Medicine—Clinical Terminology). SNOMED CT is a reference terminology developed and maintained by the College of American Pathologists (CAP). 

SNOMED CT has been made available to the healthcare system by HHS under a contract with 

CAP. 6 Category coding of diagnoses is coding in which each code (number) represents (the title of) 

a category of diagnoses, e.g., ‘‘Other diseases of the liver.’’ In category coding, the coding of the 

diagnosis itself and its classifying are combined into one step. 7 ICD, the International Classification of Diseases, is a serial publication of WHO. The U.S. 

created ICD–9–CM (a clinical modification, CM) in 1978 for use in hospitals and doctors’ offices. 

ICD–10–CM based on ICD–10, first edition (1992), is now in draft in a version dated June 2003. 

WHO issued a second edition of ICD–10 in 2004. Presumably the U. S. ICD–10–CM would have 

to be made to correspond with each new edition. 

STATEMENT OF THE ISSUE: 

The Federal government is being urged to replace ICD–9–CM diagnosis codes 

with ICD–10–CM diagnosis codes in the Medical Record Health Information System 

(MRHIS) 5 This system uses medical record data for three major purposes: 

PRIMARY PURPOSE: Patient care. The medical record’s primary, nonnegotiable 

purpose is to be the memory and communication tool for the physician. It has no 

substitute for the care of the individual patient. 

SECONDARY PURPOSES: (1) Billing and (2) Statistics on health and health care. 

BASIC FACTS: 

Two essential facts about the MRHIS must be included in discussing the question 

of switching from ICD–9–CM to ICD–10–CM: 

For patient care, the physician must have diagnoses in their greatest detail. 

For billing and statistics, diagnoses must be grouped. 

‘‘ICD coding,’’ the coding used in the MRHIS, is category coding,6 which captures 

only the labels of the groups (categories) in a clinical modification of ICD. The ICD 

series 7 was designed for the OUTPUT of data for statistics (and, in the U. S., the 

clinical modification (CM) is essential for billing). The ICD series was never intended for INPUT, the purpose for which we (mis)use it. The precise diagnoses are 

simply discarded, except in the rare instance where a category has only one diagnosis (see the illustration on page 8). The result is that ICD coding—category coding—is not useful for the physician in the care of the patient. 

Category coding has an especially pernicious effect for statistics. The coded data 

are already aggregated, and aggregated data can never be disaggregated—they can 

only be combined into larger groups (such as DRGs). This means that our health 

care system is in a ‘‘one-size-fits-all’’ situation and must use the same statistics for 

such disparate purposes as public policy, quality review, facility management, and 

evidence-based medicine. Common sense dictates that each of these uses has unique 

information demands and should have its own grouping of diagnoses. We propose 

a solution below. 

SWITCHING FROM ICD–9–CM TO ICD–10–CM 

Proponents of switching argue that switching is a cost-effective and necessary step 

to modernize our healthcare information system, that we must keep in step with 

other nations for international comparisons of morbidity, and that ICD–10–CM is 

more up-to-date, has more room for ‘‘things,’’ can more easily accommodate new diseases such as SARS, and is better suited to biosurveillance for terrorist and emerging disease threats. 

UP TO DATE: ICD–9, the parent of ICD–9–CM, was written in 1975 and ICD– 

9–CM was put into use in 1978. ICD–10 was written in 1989 and published in 1992. 

ICD–10–CM is still in draft form. The U.S. agreement with the World Health Organization (WHO) (the author of the ICD series of classifications) states that any clinical modifications (CM versions) must be ‘‘collapsible’’ back into the categories of 

ICD itself, which greatly reduces our freedom to keep it current with medical 

progress. 

LACK OF SPACE: A second argument is that ICD–9–CM has few remaining 

codes to assign to new diagnoses. Actually it uses only about 13,000 codes out of 

the over 100,000 permitted by its structure. The problem is that it uses an antiquated code structure, where the code indicates the location of a category in a hierVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00079 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
76 

8 ICD–10– and ICD–10–CM maintain this antiquated hierarchical code structure, but have a 

higher number of possible codes. Depending on how our knowledge of disease increases, ICD– 

10 could also eventually ‘‘run out of codes’’ in some parts of its category hierarchy. 9 Canada created and implemented its own modification of ICD–10 called ICD–10–CA. Similarly, Australia created and implemented ICD–10–AM. The U.K. uses ICD–10 for morbidity 

with no modifications. Note that each has used a different version of ICD–10, thus making international comparisons far more difficult than if the same code version (clinical modification) were 

used. 10The ICD–9–CM coding would continue, however, since it is at the heart of the billing process, and financial stability must be maintained. 

archy of categories.8 Modern computer methods do not require that codes be in such 

a numerical hierarchy. ICD–10–CM (2003 draft) has 67,000 codes, and thus one 

might expect that it has more clinically relevant detail, but this number is misleading. For example, one category, Code S82 Fracture of lower leg, including ankle, 

with its mandatory extensions, accounts for 3,248 of the codes in this count. 

NEW DIAGNOSES: We have no system for promptly coding new conditions such 

as avian influenza, SARS, and Gulf War Syndrome (real or suspected) with ICD– 

9–CM, nor would we with ICD–10–CM. For example, there were no ICD–9–CM 

codes for SARS until October 1, 2003, nearly 3 months after the WHO lifted all its 

travel advisories and considered the outbreak under control. Nor is the system 

ready to uniquely identify avian influenza. The inability of a category coding system 

to classify new entities is due to the necessity of deciding what they are before deciding where to put them in the classification. There are also the requirements that 

a committee make the decisions, and that changes, which must be implemented first 

by human coders dispersed throughout the nation, are only made once a year. 

INTERNATIONAL MORBIDITY DATA: The U. S. is under no obligation to use 

ICD for anything other than mortality data. In personal communication with Dr. 

Slee, a WHO statistician stated that for virtually all international morbidity studies, 

special data collection is required. 

BIOSURVEILLANCE: Proponents of ICD–10–CM argue that it is essential to 

make the switch to have better disease surveillance for terrorist and emerging infectious disease threats. However, the current biosurveillance system makes little use 

of even ICD–9 codes for detecting disease outbreaks. When physicians, hospitals, 

and laboratories report notifiable diseases to public health, they do not use (nor are 

they required to use) ICD–9–CM codes. Influenza surveillance relies in part on mortality statistics (which are retrospective, of course), but mortality statistics are already compiled using ICD–10 (not ICD–10–CM) codes. We have already noted the 

inadequacy of ICD–9–CM for accommodating emerging disease threats such as 

SARS. 

In view of these facts, the arguments as to advantages of ICD–10–CM over ICD– 

9–CM lose a great deal of their weight. 

FINANCIAL IMPACT: 

MONETARY COSTS: Two estimates have been made of the cost of switching to 

ICD–10–CM from ICD–9–CM. The RAND Corporation figure, for the Centers for 

Disease Control, was from $425 million to $1.125 billion over 10 years. The Robert 

E. Nolan Company figure, for the Blue Cross Blue Shield Association, was from $6 

billion to $14 billion over 2–3 years. The higher figures are likely to be more accurate, because Nolan based its estimates on similar information technology conversions in the past, namely actual costs to the healthcare system of the year 2000 

(Y2K) remediation and Health Insurance Portability and Accountability (HIPAA) 

compliance. Nolan also gave some details of actual costs incurred by Canada, Australia, and the United Kingdom during their switch to ICD–10.9

Regardless, the switch would require the commitment of human and financial resources which would thus not be available for solving the underlying problem with 

health care information: we use diagnosis output codes for diagnosis input. Detailed 

diagnosis input is a building block on which the entire MRHIS must be (re)built. 

It is critical that the healthcare system and the federal government devote resources 

to the solution of this problem, as we discuss below. 

SAVINGS: The most optimistic estimate of the benefit of switching to ICD–10– 

CM is $7.7 billion over 10 years (Rand). By contrast, the projected savings to the 

healthcare system of a national health information network (NHIN), as envisioned 

by the Office of the National Coordinator for Healthcare Information Technology 

(ONCHIT), is $337 billion over the first 10 years, and $77.8 billion per year thereafter (Reference 1). This estimate assumes the use of the EMR, the adoption of 

which requires diagnosis input codes in place of ICD–9–CM codes.10 Importantly, 

none of the benefit of NHIN results from switching to ICD–10–CM. 

77 

11Diagnosis entity coding, necessary to modernize MRHIS, is coding in which each code represents an individual diagnosis entity. The diagnoses can, with this coding, be placed in ANY 

classification, e.g., ICD–9–CM, ICD–10–CM, or policy, planning, or research groupings. 

BUILDING NHIN: Achieving this goal would be seriously delayed. In the event 

of a switch to ICD–10–CM physicians would have to give the new code system priority over the EMR so that they could maintain revenue. Health plans considering 

financial incentives to physicians for adopting EMRs would have to divert resources 

to the ICD–10–CM switch. Hospitals, health plans, physicians, and state governments would all have fewer resources to devote to developing health care data exchange. 

INFORMATION COSTS: The costs of the switch in its effects on health and 

healthcare information cannot be predicted, but they may well be, in the long run, 

more important than money. One particular effect: 

Longitudinal studies (studies which cross the date on which classifications change, 

e.g., from ICD–9 to ICD–10) usually are seriously disrupted and often have to be 

abandoned. Disturbance of such studies costs money as well as information. To illustrate with one such study: 

ICD–10 has been used for U.S. mortality tabulations effective with 1999 death 

certificates. In Florida, the AIDS death rate, which had been declining by about 6% 

per year until 1999 took a sudden rise of about 6% in that year. Investigation 

showed that this 12–13% jump was entirely due to the coding change; the true trend 

had been badly distorted (See Reference 2). 

INFORMATION QUALITY: Information quality always sags, often for several 

years, simply as the result of changing coding (the effects are prolonged by the fact 

that implementation cannot be achieved on a single date; all elements of the system, 

from coders, through computers, must be up to speed before the system becomes reliable). 

HOSPITAL AND PHYSICIAN REIMBURSEMENT: Our reimbursement system is in financial equilibrium. Any change in coding would require recalibration, 

involving collection of both medical and financial information on huge numbers of 

patients (enough to give statistical validity to each DRG, for example), and parallel 

operation of both the old and the new systems until reliability could be guaranteed. 

This is truly a non-trivial aspect of switching. 

MODERNIZATION OF THE MRHIS: The switch would delay attention to actually modernizing the system, as outlined below. 

MODERNIZATION OF THE MRHIS 

We contend that we should not try to put a ‘‘band-aid’’ on our obsolete MRHIS. 

Instead, we should develop the missing component, a system for INPUT of diagnoses, and bring the system up to 21st century standards. Modernization should 

start with these steps: 

1. DELAY THE SWITCH to ICD–10–CM: We should continue to use ICD–9– 

CM, modifying it as necessary for the reimbursement system, in order to free 

the resources, human and financial, needed to modernize the system. 

2. DEVELOP A CODED DIAGNOSIS INPUT SYSTEM: Add diagnosis entity 

coding 11 to the medical record. 

It is a basic principle in science that original observations—in this instance, original medical records—should be preserved permanently, without alteration, in order 

to permit review and further analysis as needed. Preserving diagnoses only after 

they have been placed in groups and have lost their individual identity, as we do 

today with category coding input, is a gross violation of this basic principle. The 

practice is an embarrassment and should be stopped immediately. Entity coding 

would permanently preserve the original diagnoses. 

The needed input system would be simple and user-friendly for the physician— 

with no look-up or coding required. This would demand three critical attributes. The 

system would 

a. Accept natural language input for any term the physician wishes to use (See 

Reference 8 which discusses ‘‘free vocabulary’’ and References 3 and 4 which discuss 

the need for an ‘‘interface’’ vocabulary for users of EMRs). 

b. Map, by computer, this free language term to a standard vocabulary such as 

SNOMED CT. (SNOMED CT is a reference terminology for well-studied conditions, 

not an input terminology, although its preferred terms are, of course, often those 

the physician normally uses.) 

78 

c. Provide instant, ‘‘realtime’’ codes for new diagnoses such as SARS—coding for 

new terms is delayed in the present system for months or years, as was the case 

with AIDS. 

3. DEPLOY THE INPUT SYSTEM: Make the entity diagnosis coding system 

freely and readily available to all elements of health care. 

ADVANTAGES OF THE MODERNIZED SYSTEM 

The modernized system would 

1. Provide physicians the detailed diagnoses they need for patient care. 

2. Remove a major barrier to acceptance of the EMR. 

f 

America’s Health Insurance Plans 

Washington, DC 20004 

July 26, 2005 

The Honorable Nancy Johnson Chairman 

Subcommittee on Health 

House Ways and Means Committee 

1136 Longworth Building Washington, D.C. 20515 

Dear Madam Chair: 

On behalf of America’s Health Insurance Plans (AHIP), I am writing to submit 

testimony for your subcommittee’s July 27 hearing on health information technology. 

AHIP and our members are committed to playing a leadership role in developing 

an interconnected health care system—based on voluntary, national, uniform standards—in which consumers and providers have access to patient-owned Personal 

Health Records (PHRs) that provide integrated health information, from all clinicians and all settings of care, in a usable form and in a timely manner. Our testimony focuses on several key areas: 

• opportunities to deploy health information technology to improve quality, value 

and efficiency for health care consumers; 

• the role health insurance plans are playing in advancing health information 

technology through the Ambulatory Care Quality Alliance (AQA) and other initiatives; and 

• the importance of establishing consumer-centric Personal Health Records 

(PHRs) that are fully compatible with Electronic Health Records (EHRs). 

We are pleased that health information technology has been the focus of bipartisan legislation in both chambers of Congress. At the same time, we have serious 

concerns about one proposal addressed by several pending bills. Specifically, we 

strongly oppose provisions that would relax the federal fraud and abuse laws for the 

purpose of allowing hospitals to support physician use of health information technology. We are concerned about the unintended consequences of tying physicians to 

hospitals financially through equipment subsidies or electronic record sharing. 

Moreover, the ability of physicians to cooperate with other providers—and deliver 

services in a range of hospitals—may be hindered if they become dependent on a 

hospital-based information sharing network. 

Another concern is that the proposed exceptions could unintentionally lead to local 

information sharing programs that are isolated and impede the development of the 

interconnected system that is needed to exchange information across the country. 

We believe that creating new exceptions to the current fraud and abuse laws is not 

only unnecessary, but will undermine the integrity of the existing regulatory framework. 

Thank you for considering our concerns on this issue. We also appreciate this opportunity to submit testimony on the broader issue of advancing an interconnected 

health care system to improve the delivery and quality of health care in America. 

Sincerely, 

f 

Karen Ignagni 

79 

i Health Care Financing Review/Web Exclusive/December 2, 2004, Volume 1, Number 1, page 

2. 

Statement of Rebecca Marshall, American Academy of Pediatrics, 

Elk Grove Village, Illinois 

Introduction 

This statement is submitted on behalf of the American Academy of Pediatrics 

(AAP), an organization of 60,000 primary care pediatricians, pediatric medical subspecialists, and pediatric surgical specialists who are dedicated to the health, safety, 

and well being of infants, children, adolescents, and young adults. The AAP would 

like to thank the House Committee on Ways and Means for the opportunity to submit a statement for the record on congressional involvement to further the adoption 

of health information technology (HIT). 

Key Principles 

In January 2005, the AAP joined with the American Board of Pediatrics, the 

Child Health Corporation of America, and the National Association of Children’s 

Hospitals and Related Institutions to develop the following key principles of a National Health Information Infrastructure: 

1. Every child should have a personal electronic health record that is available 

24 hours a day, 7 days a week, in whatever location is necessary to provide 

care to the patient. If regional networks are formed to facilitate the sharing 

of data within a community, it is crucial that these networks be built using 

the same national standards for data, functionality, and transmission so that 

patient information may be shared across networks when necessary. 

2. All information systems must be built on national standards for both data and 

functionality. The Health Level 7 (HL7) EHR Draft Standard for Trial Use, its 

accompanying standards, and future versions should be adopted in all health 

care settings, including hospital, ambulatory care, and public health. The use 

of controlled medical terminology should be encouraged in the design of any 

data structure. 

3. A standard method of transmission of data among information systems must 

be established. 

4. All information systems and procedures for data transmission must protect the 

privacy and integrity of patient data through compliance with the Privacy and 

Security Rules of the Health Insurance Portability and Accountability Act 

(HIPAA) of 1996. Systems must also be flexible enough to enable more stringent controls where required by law. Data sharing will require national standards for authentication of users and verification of access rights, and must support audit tools. 

5. The availability of planning and implementation grants to begin building local 

networks based on national standards and including all health care providers 

would greatly improve the speed at which the NHIN will develop. 

These key principles highlight the need for national standards for data, 

functionality, transmission, and vocabulary so that a patient’s electronic health 

record is accessible wherever it is needed, whenever it is needed. 

Resource Challenges 

It is well known that one of the greatest challenges in encouraging physician 

adoption of HIT is the misalignment of incentives. Pediatricians wishing to implement EHRs face additional challenges. 

1. Children, who are generally healthy, account for less than 12% of personal 

health care spending. Therefore, market incentives have not compelled private 

industry to focus on the unique IT needs of the health care of children. As a 

result, the development of IT focused on children’s health care progressed more 

slowly than in other areas. Where it does exist, the provider must have the 

resources to develop customized IT systems. Of the pediatric dollars spent, 80% 

are generated by children with special healthcare needs (who in turn constitute 

approximately 16% of the pediatric population).i This figure supports the need 

for financial incentives for systems that improve care for the most medically 

complex children. In addition, since these children are living longer, adult systems will eventually need to handle the same functions in order to care for patients who transition out of pediatric care. 

2. Because pediatric evaluation and management services are often compensated 

at lower rates than the equivalent adult services or procedures, children’s docVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00083 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
80 

tors—pediatricians and family physicians—often are unable to invest either the 

money or time required to obtain and use IT appropriately. 

3. Because pediatricians do not make frequent use of transcription and often 

practice in solo practice or small groups, the usual components of return on investment (reduced transcription costs and reduced staff support) either do not 

apply or apply only marginally to practices, making investment in an EHR difficult to recoup. 

4. To date most public resources for IT development have been focused on the 

Medicare population, with quality improvement efforts focused on adult measures. This leaves physicians who care for children at a disadvantage, since 

there are only approximately 12,000 pediatric Medicare beneficiaries, and risks 

allowing market forces to drive EHR development based almost exclusively on 

adult care. 

Recommendations 

In order to encourage adoption of HIT without impeding progress already being 

made, Congress should: 

1. Ensure that the Office of the National Coordinator for Health Information 

Technology receives sufficient funding to continue its work. 

2. Allow for licensing and support of national health information standards identified by the Department of Health and Human Services. 

3. Provide funding to support activities of standards development organizations, 

which often rely on volunteers for labor-intensive development, refinement, and 

maintenance of standards. 

4. Ensure that legislation impacting healthcare quality improvement activities 

and incentives for HIT adoption apply to Medicaid and SCHIP populations, in 

addition to Medicare. 

5. The Stark laws and anti-kickback legislation should be relaxed to allow for 

data-sharing between the hospital and the ambulatory practice. In addition, 

since large medical centers typically have financial and other resources for development of clinical information technology that small, ambulatory practices 

do not, there should be some provision for sharing of those resources to assist 

local providers in accessing the RHIO. 

In conclusion, the American Academy of Pediatrics fully supports efforts to speed 

the adoption of electronic health records across the nation. The Academy is heavily 

involved in clinical information technology standards-setting and in assisting its 

members as they make this transition. The fate of our children’s healthcare is at 

stake. We are available to answer any questions you may have regarding this very 

important subject, especially as it relates to children. The Academy appreciates your 

efforts, which will assist our members and all those who care for children in improving health care quality and safety. 

f 

Statement of Jane M. Orient, M.D., Association of American Physicians & 

Surgeons, Tucson, Arizona 

Madame Chairman and Members of the Committee: 

The Association of American Physicians and Surgeons was founded in 1943 to preserve private medicine. We represent thousands of physicians in all specialties nationwide, and the millions of patients that they serve. I am the executive director, 

and a practicing internist in Tucson, Arizona 

Nine years ago, President Bill Clinton signed into law the Kennedy-Kassebaum 

bill, also known as the Health Insurance Portability and Accountability Act of 1996 

(HIPAA). It was the end product of three and a half contentious years of White 

House and Congressional horse-trading. These efforts resulted in new laws that 

were supposed to make health insurance easier to purchase, with the capability to 

follow a worker from one job to another, with policies more responsive to the needs 

of patients, doctors and hospitals. It was also supposed to help 38 million Americans 

obtain health insurance. 

There are now an estimated 45 million uninsured Americans, according to the 

U.S. Census Bureau and other government sources. Premium increases grew by 8% 

in 2000, 11% in 2001, 13% in 2002 and 14% in 2003. We now spend an estimated 

$480 billion annually on U.S. health care, according to the Robert Wood Johnson 

Foundation. 

81 

We believe that this situation is in large part the unintended consequences of 

HIPAA. Additionally, many of the rules of HIPAA continue to erode the quality of 

health care, add to the cost of medical and administrative services, and undermine 

the patient-physician relationship. 

Rather than making medical care portable and more accountable, HIPAA has apparently laid the foundation for a one-size-fits-nobody national health insurance program. Reliance on the Internet and an interoperable technology system may promise 

cost-savings to the federal government and certain third-party payers, but it will 

add enormous, unsupportable costs to private practitioners and small facilities. 

Moreover, many physicians fear that the establishment of an Internet-based health 

information infrastructure will enable facilitate, or even lead inexorably to an effective hostile government takeover of American medicine. 

One of the objectives of HIPAA is the creation of a mandatory electronic coding, 

tracking and surveillance system that would use a uniform set of codes for every 

single medical procedure. Every doctor, hospital and clinic would be required by law 

to submit these coded procedures so that diseases could be tracked and ‘‘quality’’ 

could be monitored. Even if proponents deny that a national database would be established, the existence of multiple, interoperable databases would be its functional 

equivalent. In other words, everyone’s personal medical history, including the most 

sensitive and intimate records, would be accessible on the ‘‘worldwide web’’ to persons unknown to the patients, with unpredictable and potentially devastating effects. 

Back in 1996, when the ‘‘Information Superhighway’’ began electronically linking 

all of humankind, it was paved with fiber optics that led to high-speed modems. 

There were no visible potholes, viruses or worms, and just a few annoying pop-ups. 

The Internet looked like the answer to our dreams of a modern world, but it has 

become a dangerous place for storing personal records of any kind. 

One only needs to consult the Congressional Record of June 23, 2004 to better 

understand the intent and scope of medical information technology: Upon introduction of his Health Care Modernization, Cost Reduction and Quality Improvement 

Act of 2004, legislation (S. 2421, 108th U.S. Congress) amending HIPAA and the 

Public Health Service Act, Sen. Edward Kennedy explained his vision for medical 

information technology: 

‘‘The legislation we are introducing is an effective way to modernize and improve 

the health care system, by using modern information technology, by paying for 

value and results [emphasis added] and not simply for procedures performed or 

patients admitted to hospitals, and focusing in improving quality and preventing 

disease,’’ Kennedy explained to his colleagues. 

In one paragraph, Kennedy proposed that what was supposed to be a way to help 

seniors pay their medical bills into a command-and-control economy directed from 

Washington. His assumption that government knows enough to define ‘‘value and 

results’’ and should have the authority to deny payment for services rendered in 

good faith illustrates immense chasm of understanding of American health that currently exists between the U.S. Senate and the practitioners of modern medicine 

The government takeover begins with so-called Pay-for-Performance (Pay-for-Conformance really) within the Medicare program. Doctors would not be allowed to participate in Medicare unless they met all the information technology requirements 

proscribed by the U.S. Congress. 

But that is just the camel’s nose! Even if in compliance with the electronic requirements, doctors would only be paid for what bureaucrats decide should be done, 

under what circumstances, for whom, and with what results—in other words only 

for care that follows government ‘‘guidelines.’’ (These will be ‘‘voluntary,’’ so physicians will be responsible for any untoward consequences, but any ‘‘deviation’’ will 

have to be justified or punished.) If paid only for ‘‘successful’’ outcomes, physicians 

who desired to remain financially solvent might be forced to restrict their practice 

to patients with a relatively good prognosis, who are inclined to follow doctor’s orders. 

Under the guise of streamlining the practice of medicine by discouraging any procedures that computers might be able to identify as defensive medicine, Pay-for-Performance becomes an obstacle to medicine tailored to the needs of individual patients by focusing only on pre-approved procedures for specific treatments and illnesses. 

The electronic surveillance of medicine would make it that much easier for trial 

lawyers to sue doctors, and doctors who would no longer be paid for defensive medical practices. Under Kennedy’s proposal, doctors would not be paid for anything but 

results 

If the House Ways & Means Committee and the U.S. Congress intend to reduce 

medical costs, increase quality, and eliminate needless tests and administrative 

82 

overhead, a good first step would be to complete work on long-overdue and badly 

needed caps on monetary awards for ‘‘pain and suffering,’’ limits on contingency fees 

that lawyers charge, and penalties for filing unfounded lawsuits. 

Instead, the federal government may require use of the Internet to expose private 

medical records, monitor medical procedures, and dictate the day-to-day operations 

of doctors’ offices, hospitals, and pharmacies. 

The government-dictated medical information technology movement and the intrusive, restrictive central planning in American medicine that it would foster would 

render the practice of modern medicine as we know it today virtually impossible. 

The quality and privacy of medical care would suffer, as well as availability, because 

many excellent practitioners are likely to become demoralized and withdraw from 

active practice as soon as possible, unwilling to perform under constant surveillance 

by bureaucrats. Advancements in medical technology and groundbreaking treatments for disease would become nonexistent, because the federal government would 

control all financial incentives for medical research and development. 

As the members of this Committee debate the broader issues of medical information technology, and the potential for cost-savings for government programs like 

Medicare and Medicaid, please keep foremost in your mind the need to protect the 

sacred relationship between physicians and their patients. In this 109th U.S. Congress, doctors and their patients are facing a deluge of punitive and doctrinaire regulatory proposals including the failure to reform medical liability laws, moratoriums 

on physician financial interest in specialty hospitals, information technology requirements for physicians participating in Medicare, and now the proposed assault 

on the actual practice of medicine—pay-for-performance. 

The Association of American Physicians and Surgeons is urging restraint, reflection and reassessment of the use of relatively novel information technology and its 

relationship with government programs and federal and state spending on health 

care. Forcing technology on medicine by top-down central planning risks an end to 

advancements in information technology, as outmoded, inappropriate, cumbersome 

systems are imposed. Physicians and medical facilities will voluntarily adopt technology as they find it serves their patients well, just as they have been quick to use 

new imaging technology, surgical procedures, and medications. 

Please do all you can to roll back destructive federal interference in medicine, so 

that those with actual knowledge of medicine and of their patients can do their jobs 

efficiently, economically, and privately. At least, stop adding new burdens to a system already overloaded by counterproductive regulation. 

f 

Statement of Robin J. Thomashauer, Council for Affordable Quality 

Healthcare 

The Council for Affordable Quality Healthcare (CAQH) is an unprecedented alliance of the nation’s leading health plans, networks and industry trade associations 

(see Appendix) working collaboratively to help improve the healthcare experience for 

consumers and providers. Our members, who provide healthcare coverage to more 

than 50 million Americans, are strongly committed to developing and implementing 

programs that reduce administrative burdens for physicians and patients and improve quality of care. On behalf of its Board of Directors and members, we appreciate the opportunity to submit a written statement for consideration by the U.S. 

House Ways and Means Committee for inclusion in the printed record of the Subcommittee on Health July 27, 2005 Hearing on Health Care Information Technology. 

The purpose of this statement is to make the committee aware of a public-private, 

multi-stakeholder initiative that is currently developing an approach to promote and 

facilitate interoperability between health plans and providers. Facilitated by CAQH, 

the initiative is called the Committee on Operating Rules for Information Exchange 

or CORE. 

Interoperability 

The benefits of an interoperable healthcare system are well understood. However, 

technology adoption rates, data security, and inconsistency associated with transactions between health plans and providers have made interoperability in the 

healthcare arena extremely difficult. No quick, effective mechanism exists today for 

provider practices to access consistent patient administrative data—plan coverage, 

co-pays, deductibles, etc. Furthermore, the information that is available varies from 

plan to plan, requiring provider office staff to spend hours of time on the phone or 

83 

Web tracking down information. It is estimated that the cost of this administrative 

work runs in the millions of dollars per year. Incomplete or incorrect data has often 

been cited as a significant cause of denied claims by insurers. CAQH and its members strongly believe that interoperability between providers and plans is critical to 

advancing improvements in healthcare data transactions. 

The Banking Industry Model 

After conducting extensive research on the best approach for facilitating interoperability, CAQH determined that a solution could be found in the banking industry. In that sector, electronic data exchange rules—embraced by the industry—has 

made ATM transactions and direct deposits an everyday occurrence. Throughout 

2004, CAQH worked with NACHA, The Electronic Payments Association, and other 

experts in the banking field to develop an organizational structure by which all appropriate stakeholders could participate in an initiative to bring interoperability to 

healthcare. NACHA establishes and enforces the standards, rules and procedures 

that enable financial institutions to exchange payments on a national basis through 

the ACH (Automated Clearing House) Network. CAQH drew on the organization’s 

more than 30 years of expertise in developing operating rules for the financial and 

energy industries. 

Committee on Operating Rules for Information Exchange (CORE) 

CORE is the result of the collaboration between CAQH and NACHA. Launched 

in January 2005, CORE is bringing together industry stakeholders to build consensus on a set of operating rules that will govern eligibility and benefits data exchange. It is important to note that the initiative is solely focused on developing operating rules and not software solutions. CORE believes that industry vendors, including those currently participating, will develop software products that adhere to 

the operating rules and enable consistent data exchange. 

Based on that focus, CORE is working to 

• Identify common business practices between trading partners that will facilitate 

ease of information exchange and influence the simplification of data exchange 

between disparate processing systems by supporting the identified common 

business practices 

• Ensure all recommendations are independent of any technology or vendor solution 

• Interact with standard setting bodies to facilitate business rules enhancements 

(CORE rules will be built on existing HIPAA standards) 

• Define clear roles and responsibilities for all stakeholders: technology solution 

vendors, payers (public and private) and their trading partners, business associates of trading partners and clearinghouses, and providers 

• Identify key changes that must be made by trading partners 

• Suggest migration steps to promote successful adoption of CORE operating 

rules 

• Promote and encourage voluntary adoption of the rules with tools and support 

• Support HHS national health information network Guiding Principles 

• Report and monitor successes and status of mission by participating entities 

and provide tools and assistance, where possible, to assist in the implementation of CORE’s mission, vision and strategy 

A Phased Approach 

CORE was envisioned as a multi-phase initiative (see timeline below). Stakeholders strongly believed that a process allowing meaningful but achievable initial 

results was particularly important. Therefore, its first set of operating rules, slated 

for rollout in early 2006, will help standardize delivery of the following set of data 

to providers: 

• Determine which health plan covers the patient 

• Determine patient benefit coverage 

• Confirm service type 

• Confirm the patient’s copay amount (as defined in the member contract) 

• Confirm the patient’s coinsurance level (as defined in the member contract) 

• Confirm the patient’s base deductible levels (as defined in the member contract) 

Initial CORE efforts (Phase I) are building on applicable HIPAA eligibility transaction requirements. Going forward, CORE will create rules for additional components of eligibility transactions, such as the amount the patient owes for services, 

what amount the health plan will pay for authorized services and coordination of 

benefits, enrollment/ disenrollment and claims status, prior authorization and referrals. CORE’s long-term aim is to standardize a comprehensive set of patient adminVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00087 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
84 

istrative data, greatly decrease data request response times and eliminate phone 

calls and website searching to track down the information. 

CORE Participation 

CORE participation is open to every organization that has an interest in eligibility 

transactions. To date, the initiative has succeeded in attracting nearly 70 industry 

stakeholders. These include health plans, providers, vendors, CMS and other government agencies, associations, regional entities, standard setting organizations and 

organizations from the banking industry (see Appendix). 

Participating organizations are contributing input on the operating rules by serving on CORE’s Steering Committee and/or its three work groups. 

Steering Committee—Accountable for CORE strategic oversight and creation of a 

long-term vision with objectives and implementation time frames. 

Policy Work Group—Developing CORE policies and procedures, such as a contractual participant ‘‘pledge’’ that states commitment to comply with CORE operating 

rules. 

Technical Work Group—Determining the technical specifications for CORE. 

Rules Work Group—Writing the detailed business rules that will be reviewed by 

the Steering Committee and voted on by CORE members. 

CORE Timeline 

The initiative is on track to finalize Phase I rules and policies by year-end and 

encourage participant implementation in 2006. All participating organizations recently received a Mid-year Communication Package, which included ‘‘strawman’’ 

drafts of the CORE Phase I rules, such as the CORE pledge and standards for response times. The rules will be completed and tested by the end of 2005. 

CORE’s three phases are scheduled as follows: 

Phase 1: 2005—Early 2006 

• Establish CORE Vision, Steering Committee and Work Groups • Create operating rules for selected patient eligibility and benefits data elements 

and create a formal methodology to gain market commitment and adoption 

Phase II: 2006—2007 

• Promulgate and promote adoption of CORE Phase I operating rules • Identify other opportunities to enhance market adoption and industry support 

for interoperability among trading partners • Create rules for additional components of eligibility transactions, such as the 

amount the patient owes for services, what amount the health plan will pay for 

authorized services and coordination of benefits • Create rules for other business transactions, which may include enrollment/ 

disenrollment and claims status 

Phase III: 2007 and Beyond 

• Promulgate and promote adoption of CORE Phase II operating rules • Identify other opportunities for enhanced interoperability among trading partners • Create rules for other business transactions, which may include prior authorization and referrals 

In Conclusion 

CAQH, its Board and members and all CORE participants support an interconnected healthcare system that allows for real-time, standardized, quality data exchange among all stakeholders. We are committed to playing a leadership role in 

achieving that system. And we believe that the time to pursue that goal is now and 

feel certain that CORE will make a significant contribution. 

As Congress works to address the many issues surrounding healthcare IT, we are 

eager to offer our assistance. CAQH looks forward to a continuing dialogue with 

committee members on modernizing the healthcare system. 

f 

Statement of Richard Trachtman, American College of Physicians 

The American College of Physicians (ACP)—representing 119,000 physicians and 

medical students—is the largest medical specialty society and the second largest 

medical organization in the United States. Internists provide care for more Medicare 

patients than any other medical specialty. Of our members involved in direct patient 

care after training, 50 percent are in practices of 5 or fewer physicians and 66 perVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00088 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
85 

1 Institute of Medicine, Crossing the Quality Chasm—A New Health System for the 21st Century, March 2001, and U.S. Department of Human Services, Information for Health: A Strategy 

for Building the National Health Information Infrastructure, Report and Recommendations from 

the National Committee on Vital and Health Statistics, November 15, 2001. 2 Bush, George W., State of the Union, Washington, DC, January 20, 2004. 

cent are in practices of 10 or fewer. We congratulate Subcommittee Chairman 

Nancy Johnson and Ranking Member Pete Stark for recognizing the importance of 

moving toward an interoperable health information technology infrastructure and 

the crucial role the federal government has in assisting the health care industry acquire and utilize information technology. Thank you for holding this important hearing on congressional involvement in speeding the adoption of health information 

technology. 

Background 

In the Institute of Medicine’s (IOM) 2001 Report, ‘‘Crossing the Quality Chasm— 

A New Health System for the 21st Century,’’ the authors describe the growing disparity between society’s willingness to embrace the advantages of information technology in many aspects of everyday life, with the exception of health care. The IOM 

report cautions, however, ‘‘In the absence of a national commitment and financial 

support to a build a national health information infrastructure—the progress of 

quality improvement will be painfully slow.’’ 1 Since that time, numerous studies 

and other policy experts agree that the full adoption and utilization of health information technology (HIT) can revolutionize health care delivery by improving quality 

of care and reducing high medical costs. 

Meanwhile, Congress and the Administration have taken some initial steps to advance the adoption of an interoperable health information infrastructure model. The 

2003 Medicare Modernization Act anointed the Commission for Systematic Interoperability to take the lead in developing a strategy for the adoption of uniform national standards. In the 109th Congress, several bills have been introduced to mold 

the framework for adopting HIT infrastructure. 

President George W. Bush also seized on the opportunity to further HIT adoption. 

In his January 2004 State of the Union address, Bush first described the benefits 

that information technology will bring to the health care sector: ‘‘By computerizing 

health records, we can avoid dangerous medical mistakes, reduce costs and improve 

care.’’ 2 The President backed up this support by proposing additional funding for 

federal HIT initiatives in his FY 2005 and FY 2006 Budgets. 

More significantly, however, was the April 2004 announcement by the President 

calling for the widespread adoption of interoperable electronic health records within 

the next decade. To oversee this bold, new, ten-year initiative, the President announced the creation of the Office of National Coordinator for Health Information 

Technology (ONCHIT), and named its first Director, Dr. David J. Brailer. Subsequently, ONCHIT devised a 10-year funding strategy for policymakers to consider 

in speeding HIT adoption nationwide. According to ONCHIT’s ‘‘Framework for Strategic Action,’’ Congress should consider several funding options, including additional 

Medicare reimbursement as well as the use of loans, tax credits, and grants. It also 

should consider the easing of fraud and abuse laws to allow the sharing of electronic 

hardware. 

ACP strongly supports the Congress and the Administration in these initiatives 

to speed the adoption of uniform standards for health information technology (HIT). 

The College is committed to providing practicing internists with practical tools to 

help them improve quality. ACP’s Physicians Information and Education Resource 

(PIER) provides ACP members—at no cost to them—with access to ‘‘actionable’’ evidence based guidelines at the point of care for over 300 clinical modules. PIER has 

also been incorporated into several electronic health record systems. It is currently 

in the process of aligning its evidence-based content to support a starter set of measures selected by the Ambulatory Care Quality Alliance (AQA). PIER is also creating 

paper order sets that imbed such quality measures so that physicians who have not 

made the transition to electronic health records could still utilize PIER content to 

support their participation in performance measurement initiatives. 

ACP’s Practice Management Center has developed resources to help internists in 

the decision-making process on electronic health records and is leading an initiative 

to provide internists with tools and best practices to help them redesign their office 

processes to improve health care quality. 

But without sufficient financial assistance from the federal government to 

incentivize providers to purchase the full range of HIT, particularly those in small 

physician practices, we will be unable to achieve a smooth transition into a fullyintegrated HIT society. We believe it is absolutely essential for Congress to 

86 

3Walker, Jan; Pan, Eric et al., Health Affairs, ‘‘The Value of Health Care Information Exchange and Interoperability,’’ January 2005. ‘‘Full standardized health care information exchange and interoperability could yield a net value of $77.8 billion per year once fully implemented.’’ 4 Center for Studying Health System Change, ‘‘Most Medicare Outpatient Visits Are to Physicians With Limited Clinical Information Technology,’’ July 2005. 5 Congressional Research Service, ‘‘Health Information Technology: Promoting Electronic 

Connectivity in Healthcare,’’ The Library of Congress, April 13, 2005. 

begin to immediately fund initiatives to adopt uniform national standards, 

and to fully fund the pilot testing of HIT integration into all health care 

sectors. 

The Benefits of Interoperable Health Information Technology 

Policymakers agree that the universal utilization of interoperable HIT can revolutionize health care delivery by putting real-time clinically relevant patient health 

information and up-to-date evidence-based clinical decision support tools into the 

hands of providers. Adoption of HIT at all levels of health care will lead to the improvement of health care quality and reduce the high costs for individuals with complex health problems, particularly for those Medicare patients with multiple costly 

chronic conditions. 

Investment in the adoption of HIT is expected to result in significant return savings. The Department of Health and Human Services (HHS) and ONCHIT 

both agree that savings from a universal interoperable HIT infrastructure 

could achieve between $140 billion to $170 billion per year, close to 10 percent of total U.S. health spending. They note the majority of these savings would 

be achieved by reducing duplicative care, lowering health care administrative costs, 

and avoiding costly medical errors. Independent studies also confirm substantial annual savings as well.3

The savings could even be more substantial when the adoption of HIT is coupled 

with value-based purchasing programs (also known as ‘‘pay-for-performance’’), now 

under consideration by key congressional committees. Substantial savings in the 

Medicare Part A Trust Fund could be captured by preventing unnecessary hospitalizations caused by complications, needless duplications of medical tests and procedures, and the lowering of health care administrative costs. Unfortunately for 

small physician practices considering whether to make a significant investment in 

converting their practice to a fully-integrated HIT system, the cost-benefit analysis 

of making the initial purchase currently favors the public and private payer over 

the health care provider. 

Costs of Acquiring Health Information Technology 

The single biggest barrier to achieving fully interoperable HIT across the nation 

is the substantial cost in acquiring the necessary technology. This obstacle is especially acute for physicians practicing in small office settings, where three-fourths of 

all Medicare recipients receive outpatient care.4 An additional related barrier is that 

public and private payers, not the physicians, will realize the savings from physician 

investment in acquiring the necessary HIT (i.e., electronic health records, electronic 

prescribing, clinical decision support tools, etc). 

The initial start-up costs for the purchase of a fully interoperable HIT system can 

be substantial. Depending on the size of the practice and its applications, ac- quisition costs on average range from $16,000 to $36,000.5 (The Harvard Center for Information Technology Leadership estimates HIT systems cost about 

$29,000 per physician). The ongoing costs associated with training, maintenance, 

and system support of the HIT system make these estimates substantially higher 

over the lifetime of the practice. 

Unfortunately, the savings from interoperable HIT will largely go unrecognized 

for physicians making the investment to convert their practices. In fact, it’s more 

likely the majority of the savings from physician investment will be recognized by 

payers and patients—through a reduction in duplicative care, the lowering health 

care administrative costs leading to lower health insurance rates, and avoiding costly medical errors—not to the providers that pay the initial and ongoing implementation costs. ACP strongly believes that physicians’ collective and individual 

contributions must be recognized in order to achieve Medicare and Medicaid savings through HIT adoption. Current reimbursement policies 

should allow for individual physicians to share in the system-wide savings 

that are attributable to their participating in HIT and other quality improvement programs. 

While the College and the physician community recognize the great potential for 

improving the overall quality of care that HIT brings, the majority of small physiVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00090 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
87 

6See HSC study, July 2005. 

cian practices cannot afford to expend the necessary capital to make the initial investment. For physicians dealing with a multitude of financial issues—ranging from 

low reimbursement under Medicare and Medicaid, declining fees from managed 

care, the rising costs of medical malpractice insurance, and the cost of compliance 

under increasing state and federal regulation—the majority are not in any financial 

position to make the initial $16,000 to $36,000 investment. 

The reality of HIT underinvestment by the typical physician practice is affecting 

millions of Medicare beneficiaries. The Center for Studying Health System Change 

(HSC) recently released a study documenting the significant lack of Medicare beneficiary access to physician practices with fully-integrated HIT systems. The study 

monitored physician practice adoption trends for the following five clinical functions: 

obtaining treatment guidelines; exchanging clinical data with other physicians; accessing patient notes; generating preventive treatment reminders for the physician’s 

use; and writing prescriptions. 

While nearly half of the Medicare outpatient visits used at least one of these five 

clinical functions, according to the HSC study, only 9 percent of visits were to physician practices with electronic prescribing capabilities. The study concluded that 

while Medicare is targeting small practices by offering technical assistance and undertaking a chronic care pay-for-performance demonstration, ‘‘Broader policy efforts—including financial incentives—may be needed, however, to substantially improve patient access.’’ 6

The Need for Immediate Congressional Involvement 

The current Medicare physician reimbursement system does not reward physicians for quality. Because physicians are paid on a per-procedure or per-service 

basis, the Medicare reimbursement structure emphasizes volume over quality. In 

recognition of the need for a Medicare reimbursement system that rewards innovation and quality, Congress is examining the role that value-based purchasing programs might play in the Medicare program. 

ACP strongly believes a solution to this problem lies in changing the 

Medicare physician payment policies to reward those physicians who fully 

incorporate all aspects of HIT (and value-based purchasing programs) into 

their practice. Under today’s Medicare payment formula,physician payments is 

based upon several factors: relative value units (RVUs) for each service, reflecting 

the relative amount of physician work effort, practice expenses, and malpractice insurance expenses involved with furnishing each service; a dollar conversion factor 

that translates these RVUs into monetary payment amounts; and geographic practice cost indexes (GPCIs) for physician work, practice expenses, and malpractice insurance expenses to reflect differences in physician practice costs among geographic 

areas. But in order to speed the adoption of HIT into physician practices, and to take 

into account the ongoing, everyday costs associated with maintaining such systems, 

the College recommends Congress consider legislation that builds into the Medicare 

physician payment system an add-on code for office visits and other evaluation and 

management (E/M) services. This payment mechanism should identify that a service 

was facilitated by electronic health data systems, such as electronic health records, 

electronic prescribing and clinical decision support tools, and reimburse accordingly. 

In addition, Congress should also allocate the necessary funding for small physician practices to make the initial HIT investment to purchase the necessary hardware and software. The majority of bills that have been introduced in the 109th 

Congress only utilize either grants, loans, tax credits, or a combination of the three. 

We believe those funding mechanisms alone are insufficient to put the necessary 

HIT systems into the hands of small physician practices. 

Finally, the College is growing deeply concerned over the lack of coordination in 

the creation of uniform HIT standards. In order to facilitate the seamless and secure 

transition to an electronic flow of health information, Congress must push for the 

adoption of uniform standards for everyone to use. To date, several standards have 

already been developed by a mixture of public and private entities. Unfortunately, 

these entities are, in most cases, duplicating efforts. We believe Congress must intervene in this process and bring public and private entities together into one decision-making body to agree on existing standards, determine what additional standards are needed, prioritize future standard development, and make sure approved 

standards are maintained. 

ACP is very supportive of the initiative recently announced by HHS Secretary 

Mike Leavitt to create the American Health Information Community (AHIC), a public-private collaboration that will help develop standards and achieve interoperVerDate Aug 31 2005 07:22 Apr 14, 2006 Jkt 026387 PO 00000 Frm 00091 Fmt 6633 Sfmt 6621 E:\HR\OC\26387.XXX 26387
88 

ability of health information. This collaboration will provide a forum for interest ed 

parties to recommend specific actions that will accelerate the widespread application 

and adoption of electronic health records and other health information technology. 

We believe an entity, such as AHIC, should be recognized as the sole organization 

charged with developing uniform standards and certifying HIT products for industry 

use. Therefore, Congress must immediately authorize and provide the sustained funding to begin the development of uniform national HIT standards. 

Once developed, HIT standards will need real-world pilot testing. This should 

come as no surprise to Congress given the dire situation we found ourselves in 2003 

with the implementation of standards mandated under HIPAA Transaction and 

Code Sets Standard. As with HIPAA Standards compliance, implementation of HIT 

standards will require time and a significant amount of pilot testing by the full 

range of health care providers from all sectors with adequate HIT in place. Testing 

must include physicians in solo/small and large practice settings (rural and urban 

areas), psychologists, hospitals, community health centers, skilled nursing facilities, 

laboratories, and pharmacies. All participants in the pilot must utilize the full range 

of HIT systems and the necessary ongoing training must be provided. Therefore, 

we believe Congress must provide the necessary funding to ensure adequate testing of HIT standards across all health care sectors. These pilot 

tests can begin immediately as standards become accepted. As additional 

standards are approved, they can be immediately incorporated into the 

pilot. 

Legislation in the 109th Congress 

In the 109th Congress, a flurry of legislative proposals has already been introduced to define the federal role in speeding the adoption of HIT. ACP is supportive 

of many of the bills that have come forward, especially those we believe will lead 

to the achievement of universal acceptance and adoption of HIT. We are also 

appreciatative of the Senate-passed FY 2006 Budget Resolution that creates a HIT 

‘‘reserve fund’’ to permit financial incentives which will encourage the adoption of 

information technology for the period of fiscal years 2006 to 2010. Recognizing the 

quality and the cost savings benefits, the FY 2006 Budget Resolution provides the 

authority for the Senate Finance Committee and the Senate HELP Committee to 

report out language offering financial incentives that encourage the adoption of HIT, 

anticipating they will pay for themselves within 5 years. 

The College is particularly supportive of the bipartisan bill, H.R. 747, the 

‘‘National Health Information Incentive Act,’’ sponsored by Reps. Charles 

Gonzalez (D–TX) and John McHugh (R–NY), because it specifically targets 

those small physician practices who are in need of the most financial assistance. Like most of the legislative proposals introduced so far, H.R. 747 offsets 

the initial start-up costs and ongoing training and maintenance costs of acquiring 

interoperable HIT systems by providing grants, loans, and refundable tax credits. 

But more importantly, the legislation builds into the Medicare physician payment 

system an add-on code for office visits and other evaluation and management (E/ 

M) services, care management fees for physicians who use HIT to manage care of 

patients with chronic illnesses, and payments for structured email consults resulting 

in a separately identifiable medical service from other E/M services. These fees 

would be triggered if the procedure or service was facilitated by an electronic health 

data system (such as electronic health records, electronic prescribing and clinical decision support tools) when used to support physicians’ voluntary participation in 

performance measurement and improvement programs. Additionally,H.R. 747 takes 

the appropriate step of establishing two-year pilot testing of the standards and the 

determining quality improvements and cost savings of the integration of HIT. 

In addition, the College is also strongly supportive of the bipartisan bill, 

S. 1227, the ‘‘Health Information Technology Act,’’ introduced by Sens. 

Debbie Stabenow (D–MI) and Olympia Snowe (R–MA). Like the GonzalezMcHugh bill, S. 1227 includes one-time tax credits and grants for the purchase of 

HIT as well as Medicare physician payment changes that recognize the ongoing 

costs in maintaining HIT by authorizing adjustments to Medicare payment when an 

identifiable medical service is provided using HIT. 

The College strongly believes Congress should provide the necessary funding to 

offset the initial costs in obtaining HIT, but it should also recognize the 

unquantifiable and ongoing costs in utilizing HIT. It is this combination of one-time 

and on-going financial incentives put forward by H.R. 747 and S. 1227 that will substantially speed HIT adoption and improve access to physician practices with HIT, 

resulting in tremendous system-wide savings. Congress should recognize the 

collective and individual contributions needed to achieve Medicare and 

89 

Medicaid savings through the adoption of HIT. Therefore, we believe funding initiatives should allow for individual physicians to share in the system-wide savings that are attributable to their participating in HIT and 

other performance measurement and improvement programs. 

Conclusion 

ACP is pleased that the House Committee on Ways and Means Subcommittee on 

Health is examining the congressional role in accelerating the adoption of health information technology. We strongly believe Congress has a very important role in 

promoting the adoption of uniform standards and providing the necessary initial 

and ongoing funding mechanisms to assist small physician practices to adopt and 

utilize HIT. The benefits of full-scale adoption of interoperable HIT will be significant, leading to a higher standard of quality in the U.S. health care system. Unfortunately, without adequate financial incentives, small physician practices will be left 

behind the technological curve and their patients with them. 

f 

Statement of William Vaughan, Consumers Union 

Madame Chair, Members of the Committee: 

Consumers Union is the independent, non-profit publisher of Consumer Reports. 

Like so many others, we believe expediting the development of a common health 

care information technology has the potential to bring enormous long-term savings 

and quality improvements. 

But—and this is a big qualifier—there needs to be more consumer involvement 

in and understanding of how consumers’ very personal medical data is going to be 

used and protected. 

A truly modern health care system should enable medical providers to immediately access an individual’s medical records, images or drug reactions in an emergency, or quickly put their hands on the complete medical history of a new patient. 

But the promise of better health care through easily useable medical records is accompanied by deep fear that one’s most private medical records might be easily compromised. In recent months, we have seen this compromise of electronic data in the 

theft of millions of Americans’ financial records. Computers are hacked into almost 

daily; identity theft has become a common story. If these severe problems happen 

constantly in the financial world, the consumer wonders what is to keep them from 

happening in the medical world? 

The consensus Senate IT bill seems to deal with privacy issues largely through 

a cross-reference to the Health Insurance Portability and Accountability Act of 1996. 

Yet the average person on the street has no idea what HIPAA means, or how it may 

protect their medical recored privacy. Legislation that promotes the use of health 

care IT needs provisions that educate the American public about what it means, 

how it will work, and what a person’s rights and protections are in the new system. 

The privacy standards need to be restated and clearly explained, the penalties for 

willful and malicious violations strengthened, and individuals should be given the 

right to opt out of the system until they want to join in. Also, if a person’s medical 

record is ever compromised, they should be informed immediately about the breach. 

It should be clear that individuals should in general be able to see their records and 

request corrections. 

To date, the health care IT process has been largely a technical discussion involving providers and purveyors of IT services. But what hasn’t been talked about is 

the incredibly personal and sensitive information these electronic medical records 

would contain. Any and all advisory commissions created by any health care IT legislation should include a majority of ‘‘ordinary’’ citizens to make sure that the American consumer is comfortable with measures to protect this sensitive information. 

Rather than increasing the sense of powerlessness and vulnerability in our modern computer age, the health care IT system of the future should be a benefit to 

consumers’ quality of life of consumers. Only by including consumers in the process, 

educating the public about this technology, and strengthening privacy protections 

will consumers have faith in the new system. 

f 

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1 67 Fed. Reg. 14775 and 14777. 2 45 CFR § 164.506 3 42 CFR Part 2. 4Department of Health and Human Services, Mental Health: A Report Of The Surgeon General, (Washington D.C., GPO, 1999) p. xvii. 5Jaffe v. Redmond 518 U.S. 1 (1996). 6 Ibid. 

7 67 Fed. Reg. 1475 et seq., 264(c)(2). 8 67 Fed. Reg. 53,212. 

Statement of Richard Patrick Yanes, Clinical Social Work Federation, 

Arlington, Virginia 

Chairwoman Johnson and Members of the Committee, we appreciate this opportunity to address the Committee as it continues its work in examining the issues 

attendant to the greater uses of the developing information technologies in the 

health care field. Clearly such technologies offer great opportunities to provide improved and better integrated physical and mental health care services. Just as clearly, however, such technologies carry great risks of harm. Our comments, then, will 

be directed at our concern that such technologies not put at risk the disclosure of 

an individual’s private health information without the individual’s consent. 

For decades Congress has recognized the need to protect consumers’ personal information and has passed laws ensuring the privacy of information contained in 

bank, credit card, other financial records, and even video rentals. With respect to 

an individual’s health information, Congress has been no less vigilant. With the passage of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), 

Congress recognized the importance of protecting the consumers’ most sensitive information—health information 1 as did the previous Administration, drafting regulations implementing the Act that required consumers’ consent 2 The protection offered in HIPAA, however, was a continuation of the almost three decades long application of the confidentiality regulations developed to protect the consumers of substance abuse services.3

With the enactment of these and other legislative policies, Congress recognized 

the many reasons for safeguarding consumers’ health information including that 

many individuals will refuse to seek timely physical and mental health care for conditions they perceive may have a stigmatizing effect on them should the information 

not be held in the strictest confidence. ‘‘People’s willingness to seek help is contingent 

on their confidence that personal revelations of mental distress will not be disclosed 

without their consent.4 To delay treatment is to exacerbate the condition and increase costs should treatment be sought later. 

The Federal courts have also recognized the critical nature of confidentiality when 

the United States Supreme Court held in Jaffe v. Redmond that patients receiving 

mental health therapy have a right to privacy in therapist-patient communications 

and that such communications cannot be used or disclosed without their consent 5

The Court also recognized that all 50 states and the District of Columbia have enacted some form of psychotherapist-patient privilege and it was through that reason 

and experience that the Court was led to its holding.6

As the Subcommittee goes about its work we urge that the Members be mindful 

that not only has the federal government placed critical importance on the protection of health information but that many states have adopted their own standards 

of protection as well. Both the Congress and the Department of Health and Human 

Services (HHS) gave assurances through their enactment of HIPAA and its implementing regulations that federal privacy standards would not supercede state privacy laws ‘‘. . . if the provision of State law imposes requirements, standards, or implementation specifications that are more stringent than the requirements, standards, 

or implementation specifications imposed under the regulation . . .’’ 7 and again 

later when commenting on the adopted Privacy Rule HHS stated that ‘‘State laws 

that are more stringent remain in force. In order to not interfere with such laws and 

ethical standards, this Rule permits covered entities to obtain consent.’’ 8

In conclusion, as the Subcommittee continues its work to set standards for the development of information technologies and their application to health care information we urge that the Members continue to give the highest priority to the protection of the individual’s right to control the disclosure of their private health information. 

Appendix A. 

The Clinical Social Work Federation, the largest clinical social work organization 

in the United States, has members and societies in 37states both nationally and in 

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Canada. The Federation works for improvement of the standards of the profession, 

the protection of clients, and the professional development of its members. The Federation provides both clients and members with advocacy on mental health issues 

before the Congress and regulatory bodies and assists the state societies with advocacy at the state level. 

Licensed clinical social workers provide 41% of the mental health services in the 

United States and work through social service agencies, hospitals and community 

health centers, health maintenance and managed care organizations, schools, and 

private practice. Clinical social workers are licensed in all 50 states and diagnose, 

treat, and engage in preventive services of mental, behavioral, and emotional disorders in individuals, families, and groups. 

Both the states and the courts have upheld the confidentiality of the special relationship the clinical social worker has with their clients. Clinical social workers are 

also recognized and testify as expert witnesses on the diagnosis and treatment of 

mental disorders. All clinical social workers hold advanced degrees and have undergone thousands of hours of supervised clinical internships prior to licensing. 

Appendix B 

Clinical social work plays a crucial role in the delivery of mental health services 

nationally with over 250,000 licensed clinical social workers. Clinical social workers 

hold advanced degrees and have undergone thousands of hours of supervised clinical 

internships prior to licensing. In most states, clinical social workers are licensed to 

diagnose, treat, and engage in preventive services of mental, behavioral, and emotional disorders in individuals, families, and groups. 

• Clinical social workers provide 41% of mental health treatment in the country (ASWB, 2003) and have clinical training standards that are the equivalent 

of or stronger than psychologists, mental health counselors, marriage and family therapists, and psychiatric nurses. 

• Clinical social workers have one of the lowest actionable complaint rates of 

any mental health discipline with national rates of 0.9% (ASWB, 2003). 

• Clinical social workers have one of the highest satisfaction ratings of all 

mental health professionals, as surveyed and reported in a 1995 Consumer Reports article according to 4000 consumers of mental health services. 

• Clinical social workers are trained to provide diagnosis and treatment 

through psychotherapy and counseling of all mental health disorders. Both the 

states and the courts have upheld the confidentiality of the special relationship 

the clinical social worker has with their clients. 

• Clinical social workers work through social service agencies, hospitals and 

community health centers, health maintenance and managed care organizations, schools, and private practice. 

• Clinical social workers reduce medical problems and health care costs by 

treating the emotional disorders that lead to 50% of the visits to family practitioners (Office of the Surgeon General, 2000). 

• Clinical social workers play an integral role in state, county, and city mental 

health programs throughout the country. 

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