The Institute of Medicine (IOM), the National Committee on Vital and Health Statistics(NCVHS), and other expert panels have identified information technology (IT) as one of the mostpowerful tools for reducing medical errors, lowering health costs, and improving the quality ofcare. (1) They recommendthat health care organizations adopt IT systems to support the electronic collection and exchange ofpatient information. The goal is for these systems to operate seamlessly as part of a national healthinformation infrastructure (NHII), which would enable health care providers anywhere in the countryto access patient information at the point of care. While supporting the delivery of high-qualitypatient care, experts emphasize that a NHII must also meet the nation's needs for public healthsurveillance, biodefense, and biomedical research, and protect the privacy of individuals. The U.S. health care industry lags well behind other sectors of the economy in its investmentin IT, despite growing evidence that electronic information systems can play a critical role inaddressing the many challenges the industry faces. There are significant financial, legal, andtechnical obstacles to the adoption of health IT systems. The issue for Congress, in which there isbroad bipartisan support for health IT, is how best to create incentives for the adoption of ITthroughout the health care industry. Congress and the Administration have already taken a number of important steps to promotehealth IT. The 2003 Medicare Modernization Act instructed the HHS Secretary to adopt electronicprescription standards and establish a Commission for Systemic Interoperability. The Commissionis charged with developing a comprehensive strategy for implementing data and messaging standardsto support the electronic exchange of clinical data. On April 27, 2004, President Bush called for thewidespread adoption of interoperable electronic health records (EHRs) within 10 years andestablished the Office of the National Coordinator for Health Information Technology (ONCHIT). ONCHIT has developed a strategic 10-year plan outlining steps to transform the delivery of healthcare by adopting EHRs and developing a National Health Information Infrastructure (NHII) to linksuch records nationwide. The strategic plan identifies several potential policy options for providingincentives for EHR adoption. They include: providing grants to stimulate EHRs and regionalinformation exchange systems; offering low-rate loans and loan guarantees for EHR adoption;amending federal rules (e.g., Medicare physician self-referral law) that may unintentionally impedethe development of electronic connectivity among health care providers; and using Medicarereimbursement to reward EHR use. Lawmakers in the 109th Congress are likely to consider legislation to boost federal investmentand leadership in health IT and provide incentives both for EHR adoption and for the creation ofregional health information networks, which are seen as a critical step towards the goal ofinterconnecting the health care system nationwide. Congress laid the groundwork for establishingan NHII when it enacted the 1996 Health Insurance Portability and Accountability Act (HIPAA). HIPAA instructed the HHS Secretary to develop privacy standards to give patients more control overthe use of their medical information, and security standards to safeguard electronic patientinformation against unauthorized access, use, or disclosure. This report summarizes recently proposed and enacted legislation to promote the use ofEHRs and the development of the NHII. It begins with a brief discussion of some of the benefits ofbroadening the application of information technology (IT) in health care, as well as the significantfinancial, technical, and legal barriers to the adoption of health IT. That is followed by a summaryof the goals articulated in the federal government's strategic framework for health IT adoption. Thereport concludes with a set of tables summarizing health IT legislation in the 108th and 109thCongresses. Appendix A provides additional background information on health IT, including a listof congressional hearings, GAO reports, and online resources. In its June 2004 report, Revolutionizing Health Care Through Information Technology, thePresident's Information Technology Advisory Committee (PITAC) proposed a framework for a NHIIcomposed of four elements. (2) The EHR provides a clinician with real-time access to patient information, as well as acomplete longitudinal record of care. A fully integrated EHR enables a physician to update clinicaland other information about a patient on a continuous basis. Such an integrated system permits aphysician, for example, to view a history of the patient's medical condition and visits to healthproviders (with submenus for notes from those visits), images and reports of diagnostic procedures,current medications, functional status and social service eligibility, schedule of preventive services,allergies, and contact information for family caregivers. Linking a patient's EHR to a computerized CDS system provides clinicians with real-timediagnostic and treatment recommendations. CDS systems, which include a range of technologiesfrom simple clinical alerts and warnings of prescription drug interactions to detailed clinicalprotocols and procedures, facilitate the practice of evidence-based medicine by providing clinicianswith state-of-the-art medical knowledge at the point of care. CPOE minimizes handwriting and other communication errors by having physicians andother providers enter orders into a computer system. Originally designed for ordering medications,more advanced CPOE systems include orders for x-rays and other diagnostic procedures, referrals,discharges, and transfers. CPOE may also be linked to a patient's EHR and various decision supportfunctions. The final and most important element of a NHII is electronic connectivity (via the Internetand other networks) enabling health care providers to exchange patient health information. Networks that permit electronic communication among providers must be secure in order tosafeguard the information from unauthorized access, use, and disclosure. They also require thedevelopment of data and messaging standards to establish the critical goal of interoperability, thatis, the ability of two or more IT systems (computers, networks, software, and other IT components)to communicate with one another and make sense of the data they exchange. A small but growingnumber of communities and health care systems around the country have developed EHRs andestablished secure platforms for the exchange of health data among providers, patients, and otherauthorized users (e.g., the Veterans Health Administration, the Indiana Network for Patient Care,the Santa Barbara County Care Data Exchange, and the New England Healthcare Electronic DataInterchange Network). The IOM's March 2001 report on health care quality, Crossing the Quality Chasm: A NewHealth Care System for the 21st Century, emphasized the need for improvement in six key areas: safety, effectiveness, responsiveness to patients, timeliness, efficiency, and equity. A growingnumber of published studies suggest that IT can play a key role in improving the quality of care ineach of these areas. In the area of safety, CPOE systems with decision support functions can reduceerrors in drug prescribing and dosing. Clinical decision support systems have been shown toimprove efficiency, for example, by reducing redundant lab tests. They can also improve theeffectiveness of care by promoting compliance with clinical practice guidelines. Health IT may beespecially beneficial for inner-city and rural populations and other medically underserved areas. Real-time access to specialty information, including consultations between rural physicians andleading specialists at academic medical centers, helps promote an equitable health care system byreducing the geographic variability in access to the best quality care. The secure transmission ofpatient information among physicians will significantly improve the coordination of care among the60 million Americans with multiple chronic conditions. Studies have shown that poor coordinationof care among Medicare beneficiaries with multiple chronic conditions leads to unnecessaryhospitalization, duplicate tests, conflicting clinical advice, and adverse drug reactions as a result ofover-medication. An IT infrastructure has great potential to contribute to achieving other important nationalobjectives, such as homeland security and improved public health services. Linked healthinformation networks are key to reducing the time it takes to detect and respond to disease outbreaks,whether they are naturally occurring or the result of a bioterrorist attack. They are also an importanttool for helping organize and execute large-scale vaccination campaigns and for monitoring thehealth of the population. Finally, health IT is becoming increasingly important for various forms ofbiomedical and health services research, and for translating research findings into clinical practicemore quickly. By some estimates it may take as long as 17 years for new research findings to befully integrated into general medical practice. (3) The U.S. health care industry, which represents about 15% of GDP, lags far behind othersectors of the economy in its investment in IT, despite growing evidence that electronic informationsystems can play a critical role in addressing many of the challenges the industry faces. There aresignificant obstacles to the adoption of EHRs and the creation of a NHII, some of which are brieflydiscussed below. Enormous amounts of data needed for clinical care, patient safety, and quality improvementcurrently reside on computers. However, EHRs and community-based health information networkshave been slow to develop because of a lack of interoperability standards to support electronic dataexchange. Physicians and other providers are hesitant to invest in IT systems, fearing that they mightnot be able to exchange patient information with local pharmacies, hospitals, or even otherphysicians. Common standards for organizing, representing, and encoding health information permitthe efficient exchange of clinical and patient safety data. They also support the assimilation ofexternal data sources into decision support tools for providers (e.g., alerts for possible drug-druginteractions). The federal government is playing a leading role in encouraging the development andadoption of interoperability standards for health information throughout the U.S. health care system. The Departments of Health and Human Services (HHS), Defense (DOD), and Veterans Affairs (VA)are partners in the Consolidated Health Informatics (CHI) initiative, one of 24 eGov initiatives tosupport President Bush's Management Agenda. The goal of the CHI initiative is to establish federalhealth information interoperability standards both to promote information sharing across the threefederal departments that deliver health care services and to serve as a model for the private sector. To date, the agencies have adopted 20 sets of standards developed by private-sector StandardsDevelopment Organizations (SDOs). They include messaging standards, standards for the electronicexchange of clinical lab results, standards for retail pharmacy transactions, and standards for theretrieval and transfer of images and associated diagnostic information. HHS has also signed anagreement to license Systematized Nomenclature of Medicine -- Clinical Terms (SNOMED CT),a standardized medical vocabulary developed by the College of American Pathologists and availablefor free to users in the United States. SNOMED CT, which is now available through the NationalLibrary of Medicine, (4) isthe most comprehensive clinical vocabulary available and covers most aspects of clinical medicine. It will help structure and computerize the medical record and reduce variability in the way the dataare captured, encoded and used for clinical care of patients and for medical research. In May 2003, HHS requested that the IOM provide guidance to the agency on a set of basic"functionalities" that an EHR should possess, that is, the types of information that should beavailable to providers when making clinical decisions (e.g., diagnoses, allergies, lab results), and thetypes of decision-support capabilities that should be present (e.g., alerts to potential drug-druginteractions)." The IOM did not address specific data standards (e.g., terminology, messagingstandards, diagnostic codes). Health Level Seven (HL7), a leading SDO working on thedevelopment of an EHR standard, has taken the core functionalities identified by the IOM andincorporated them into its draft standard, which has been approved and is undergoing a two-year trialbefore it becomes an official standard. (5) Coordinating the care a patient receives from multiple providers does not require thetransmission of the entire EHR with each referral. In most cases the physician to whom a patient isreferred needs only the most relevant and timely facts about the patient's condition. ASTMInternational, in collaboration with the Massachusetts Medical Society, the Health InformationManagement and Systems Society, and the American Academy of Family Physicians, is developingthe Continuity of Care Record (CCR) to meet that need. The CCR is intended to be a nationalstandard for all relevant information necessary for continuity of care. It consists of a minimum dataset that includes provider information, insurance information, patient's health status (e.g., allergies,medications, vital signs, diagnoses, recent procedures), recent care provided, as well asrecommendations for future care and reasons for referral or transfer. The data contained within theCCR are a subset of the patient's full record that exists in an EHR. Each new provider that sees thepatient is able to access the CCR and update the information as necessary. Thus the CCR providesa vehicle for exchanging clinical information among providers, institutions, or other entities. It mayalso be used by the patient as a brief summary of recent care. (6) Congress laid the groundwork for establishing an NHII when it enacted the HIPAA, P.L.104-191 in 1996. HIPAA instructed the HHS Secretary to issue electronic format and data standardsfor several routine administrative transactions between health care providers and health plans (e.g.,reimbursement claims) and adopt security standards to safeguard electronic patient informationagainst unauthorized access, use, or disclosure. Developing a secure platform to protect confidentialhealth data is central to the growth of an NHII. Under HIPAA, HHS has also issued health privacystandards that give individuals the right of access to their medical information and prohibit plans andproviders from using or disclosing such information without the patient's authorization, except forroutine health care operations and other specified purposes. The growing use and exchange ofelectronic health data raises serious privacy concerns among the public and some lawmakers, whoquestion whether the privacy standards are sufficiently broad in scope to protect confidential patientinformation. There are two key financial obstacles to the adoption of EHR and the development of anNHII: investment costs, and the misalignment between costs and benefits. Investment in IT isexpensive and must compete with other priorities, including new buildings as well as othertechnologies with more direct application to clinical care and greater certainty for increasedrevenues. A full clinical IT system that includes CPOE and an EHR, coupled with clinical decisionsupport functions, can cost tens of millions of dollars for a large hospital. And that does not includethe costs of training and systems support. The start-up and maintenance costs of IT systems may be especially burdensome for smallphysician practices. While those costs vary tremendously, depending on the nature of the practiceand the applications involved, the average cost of an EHR can range from $16,000 to $36,000. Thecomplexity of the technology, the time to complete implementation, and the changes in officeworkflow patterns create additional barriers to adopting IT systems. But perhaps the most criticalissue for physicians is the perception that the IT-related benefits of improved efficiency and qualityof care accrue largely to the payers and patients, not to the providers who bear most of theimplementation costs. Rather than reward quality, most physician reimbursement systems emphasize volume ofservices. Physicians are paid for each procedure or service they provide, regardless of its quality. This approach encourages providers to see as many patients as possible and to emphasize theprovision of a billable service, such as an MRI, over technology that might improve the quality ofmany services. A physician group that invests in a clinical IT system to improve the way it managesthe care of patients with chronic conditions can reduce the number of complications and thehospitalization rate. But unless the change results in additional office visits, only the payer sees afinancial benefit. One potential solution to this problem is to provide direct payments to physicianswho use IT systems. Another is to adopt a pay-for-performance scheme that rewards clinicians whodeliver the best quality of care, according to standardized measures, as opposed to the highestvolume of care. Health IT experts have identified several federal laws that may unintentionally impede thedevelopment of electronic connectivity in health care. Because these laws do not directly addresshealth IT, health care providers are uncertain about what would constitute a violation or create therisk of litigation. The Medicare physician self-referral (Stark) law (42 U.S.C. SS 1395nn) and theanti-kickback law (42 U.S.C. SS 1320a-7b(b)), which covers all federal health care programs, are ofchief concern. Both are intended to counter fraud and abuse. (7) The Stark law prohibits physicians from referring patients to any entity for certain healthservices if the physician has a financial relationship with the entity, and prohibits entities from billingfor any services resulting from such referrals, unless an exception applies. The law discouragesphysicians from accepting IT resources (e.g., hardware and software) from a hospital or other healthcare entity out of concern that they would be in violation if they subsequently referred patients to thatentity. The anti-kickback law, like the self-referral law, also impedes arrangements between healthcare entities that promote the adoption of health IT. It prohibits an individual or entity fromknowingly or willfully offering or accepting remuneration of any kind to induce a patient referral foror purchase of an item or service covered by any federal health care program. On March 26, 2004, the Centers for Medicare and Medicaid Services (CMS) published afinal interim rule creating several new exceptions under the physician self-referral law, including onefor IT items and services furnished to physicians to enable them to participate in "community-widehealth information systems." (8) Experts have questioned whether this term is sufficiently inclusiveto cover all the various health IT arrangements. They have also criticized the lack of a parallelexception under the anti-kickback law. On April 27, 2004, President Bush called for the widespread adoption of interoperable EHRswithin 10 years and signed Executive Order 13335, which established the position of NationalCoordinator for Health Information Technology within HHS. Secretary Tommy Thompsonappointed David Brailer, MD, PhD, one of the country's foremost health IT experts, to serve in thenew position. The Executive Order directed the National Coordinator within 90 days to develop astrategic 10-year plan outlining steps to transform the delivery of health care by adopting EHRs anddeveloping a NHII to link such records nationwide. On July 21, 2004, Brailer and Thompson released a Framework for Strategic Action entitled, The Decade of Health Information Technology: Delivering Consumer-Centric and Information-RichHealth Care. (9) Althoughthe federal government has taken the lead in setting the health IT agenda, the framework sets out abottom-up approach in which the role of HHS is to promote and encourage the private sector to buildcommunity-level networks. Adopting interoperability standards will over time permit these localnetworks to connect with one another to form an NHII. The framework identified four major goals,with strategic action areas for each: Inform clinical practice . This goal focuses on bringing EHRs into clinicalpractice by providing incentives for EHR adoption, reducing the risk of EHR investment, andpromoting EHR diffusion in rural and medically underserved areas. Interconnect physicians . This goal centers on building an interoperable healthinformation infrastructure so that EHRs follow the patient, and clinicians have access to criticalhealth information when treatment decisions are being made. The strategies for realizing this goalinvolve fostering community-based health information exchange projects, developing a nationalhealth information network, and coordinating federal health informationsystems. Personalize health care . This goal involves using health IT to help individualsmanage their own wellness and become more involved in personal healthdecisions. Improve population health . The final goal requires the timely collection,analysis, and dissemination of clinical information to improve the evaluation of health care delivery,public health monitoring, and biosurveillance. It also helps accelerate research and the translationof research findings into clinical products and practice. The framework identifies several potential policy options for providing incentives for EHRadoption. They include: regional grants and contracts to stimulate EHRs and community informationexchange systems; improving the availability of low-rate loans for EHRadoption; updating federal rules on physician self-referral that may unintentionallyrestrict the development of health information networks; using Medicare reimbursements to reward the use of EHRs;and funding Medicare pay-for-performance demonstrationprograms. The Medicare Prescription Drug, Improvement, and Modernization Act (MMA), which thePresident signed into law on December 8, 2003 ( P.L. 108-173 ), included provisions for electronicprescribing standards. The bill requires the standards to include not just electronic script writing,but also the patient's medication history and decision support for identifying potential drug-to-druginteractions. In addition, the MMA called for the establishment of a commission to develop acomprehensive strategy for the adoption and implementation of health IT data standards. Finally,the bill authorized IT grants for physicians and established demonstration projects to determine howto improve the quality of care through the adoption of IT. Table 1 , beginning on page 10, providesa summary of the IT-related provisions in the MMA. In the 108th Congress, the House and Senate passed competing versions of the Patient Safetyand Quality Improvement Act ( H.R. 663 , S. 720 ). Despite broad bipartisansupport for the legislation, no further action took place before adjournment in December 2004. OnMarch 9, 2005, the Senate Committee on Health, Education, Labor, and Pensions (HELP)unanimously approved a new patient safety bill (S. 544), which is identical to last year'sSenate-passed measure. The patient safety legislation is intended to encourage the voluntaryreporting of information on medical errors by establishing federal evidentiary privilege andconfidentiality protections for such information. For more information on the patient safetylegislation, see CRS Report RL31983 , Health Care Quality: Improving Patient Safety by PromotingMedical Errors Reporting. S. 544 also requires the HHS Secretary to adopt voluntary, national interoperability standardsfor the electronic exchange of health care information. H.R. 663, in the 108th Congress, containeda similar requirement, as well as several additional health IT provisions, none of which are includedin S. 544. The House-passed bill authorized health IT grants for physicians and hospitals, andmandated the creation of a Medical Information Technology Advisory Board (MITAB). During the 108th Congress, lawmakers introduced a number of bills (i.e., H.R. 2915, H.R.4880, S. 2003, S. 2421, S. 2710, S. 2907) to boost federal investment and leadership in IT in aneffort to promote the adoption of EHRs and the development of a NHII. With the exception of H.R.2915, these measures also contained quality-of-care provisions. They included devising standardizedmeasures of physician performance and using them as the basis of pay-for-performance initiatives. So far in the 109th Congress, lawmakers have introduced two health IT bills. RepresentativeGonzalez has introduced the National Health Information Incentive Act of 2005 (H.R. 747), andSenator Kennedy has reintroduced S. 2907 as Title II of the Affordable Health Care Act (S. 16). Table 2 , beginning on page 12, compares the incentives in each of those health IT bills. Tables 3 and 4 provide more detailed summaries of the major provisions in the patient safety and health ITbills introduced in the 108th and 109th Congresses, respectively. Table 1. Summary of Health Care Information Technology (IT) Provisions in the Medicare ModernizationAct ( P.L.108-173 ) Table 2. Comparison of Bills to Encourage the Adoption of Health Information Technology (IT) Table 3. Summary of Health Information Technology (IT) Legislation Introduced in the 108thCongress a. H.R. 663 was reported (as amended) by the Energy and Commerce Committee on Mar. 6, 2003. The Ways and Means Committee approved similarlegislation (H.R. 877, H.Rept. 108-31 ) on Mar. 11, 2003. While the Ways and Means bill would amend the Medicare statute and apply only tohospitals and other health care facilities and their employees that provide health care services under Medicare Part A, the Energy and Commercemeasure would amend the Public Health Service (PHS) Act and have broader coverage. H.R. 663 would apply to any individual or entity licensedto provide health care services. Following negotiations between members of both panels, it was agreed that the new law should be written intothe PHS Act and that the Energy and Commerce bill (H.R. 633) would be brought to the floor for consideration by the full House. b. Institute of Medicine, Priority Areas for National Action: Transforming Health Care Quality (Washington: National Academy Press, 2003). c. P.L. 106-129 , the Healthcare Research and Quality Act of 1999, directed AHRQ to submit to Congress annually a report on "disparities in health caredelivery as it relates to racial factors and socioeconomic factors in priority populations," beginning in FY2003. The first National Report onHealthcare Disparities was released on Dec. 22. 2003, and is available online at http://qualitytools.ahrq.gov/disparitiesReport/download_report.aspx . Table 4. Summary of Health Information Technology (IT) Legislation Introduced in the 109thCongress a. Institute of Medicine, Priority Areas for National Action: Transforming Health Care Quality (Washington: National Academy Press, 2003).

Summary:
The Institute of Medicine, the National Committee on Vital and Health Statistics, and otherexpert panels have identified information technology (IT) as one of the most powerful tools forreducing medical errors, lowering health costs, and improving the quality of care. However, the U.S.health care industry lags far behind other sectors of the economy in its investment in IT, despitegrowing evidence that electronic information systems can play a critical role in addressing the manychallenges the industry faces. Adoption of health IT systems faces significant financial, legal, andtechnical obstacles. Congress and the Administration have taken a number of important steps to promote healthIT. The 2003 Medicare Modernization Act instructed the HHS Secretary to adopt electronicprescription standards and establish a Commission for Systemic Interoperability. The Commissionis charged with developing a comprehensive strategy for implementing data and messaging standardsto support the electronic exchange of clinical data. On April 27, 2004, President Bush called for thewidespread adoption of interoperable electronic health records (EHRs) within 10 years andestablished the position of National Coordinator for Health Information Technology. Pursuant tothe President's order, the National Coordinator has developed a strategic 10-year plan outlining stepsto transform the delivery of health care by adopting EHRs and developing a National HealthInformation Infrastructure (NHII) to link such records nationwide. The strategic plan identifies several potential policy options for providing incentives for EHRadoption. They include: providing grants to stimulate EHRs and regional information exchangesystems; offering low-rate loans and loan guarantees for EHR adoption; amending federal rules (e.g.,Medicare physician self-referral law) that may unintentionally impede the development of electronicconnectivity among health care providers; and using Medicare reimbursement to reward EHR use. Health IT has broad bipartisan support among lawmakers. The 109th Congress is likely toconsider legislation to boost federal investment and leadership in health IT and provide incentivesboth for EHR adoption and for the creation of regional health information networks, which are seenas a critical step towards the goal of interconnecting the health care system nationwide. Severalhealth IT bills were introduced during the last Congress and, to date, two bills ( H.R. 747 , S. 16 ) have been introduced this year. Congress laid the groundwork forestablishing an NHII when it enacted the 1996 Health Insurance Portability and Accountability Act(HIPAA). HIPAA instructed the HHS Secretary to develop privacy standards to give patient morecontrol over the use of their medical information, and security standards to safeguard electronicpatient information against unauthorized access, use, or disclosure.