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Health Reform and Insurance Companies: Why Most Insurers Are Not Subsidizing Health IT

By Ken Terry

Updated on: August 16, 2010 / 9:37 PM EDT / MoneyWatch

(This is Part 3 of a series on how insurance companies might influence the outcome of healthcare reform. Part 1 concerned clinically integrated physician networks and Part 2 looked at how states could regulate insurance exchanges.)
A few major insurance companies are again taking steps to help healthcare providers acquire electronic health records (EHRs), which many experts say are essential to reforming the nation's healthcare system. While commendable, these modest moves raise the question of why most health plans and employers -- which would benefit from the cost savings if healthcare quality improved -- have been so slow to help physicians computerize their practices.

One might think it's because the government is now offering physicians up to $44,000 from Medicare or $64,000 from Medicaid if they show "meaningful use" of EHRs. But experts say that's only about a third of the cost over five years. And most plans have been shunning this commitment for far longer than these incentives have been on the table.

Humana (HUM) has announced it's teaming with athenahealth (ATHN), a vendor of Web-based practice management services and EHRs, to induce about 20,000 physicians in Humana's networks to participate in a quid pro quo: If the physicians use athenahealth's EHR to supply clinical data to Humana and receive performance feedback from the plan, and if they meet certain quality benchmarks, they can receive bonuses that might increase their payments by up to 20 percent. In addition, Humana is offering to subsidize the cost of the athenahealth system for about 100 practices totaling 1,000 physicians.

Highmark, UnitedHealth Group (UNH) and WellPoint are offering incentives for meaningful use of EHRs, but these rewards will be part of the plans' pay for performance programs and might not increase the total amount available to physicians. Aetna may follow suit or may offer a separate incentive program for meaningful use.

At the same time, Aetna (AET), through its ActiveHealth subsidiary, joined with IBM to analyze hospital EHR and claims data and alert physicians about care gaps for individual patients. And WellPoint (WLP) announced that it would provide short-term financing to rural and critical-access hospitals to help them meet the "meaningful use" criteria so they can get federal incentives for EHR adoption. David Blumenthal, national coordinator health IT, praised both initiatives as the kind of public-minded ventures that will be needed to build a national electronic care system.

To which I say, hogwash. While the WellPoint initiative appears to be somewhat public-minded, the other initiatives either involve no investment or target immediate savings for the payers. The bonuses in the Humana program will come from "shared savings" that might be generated if improved preventive and chronic disease care helps patients avoid ER visits and hospitalizations. And the ActiveHealth/IBM program appears to have two objectives: first, to reduce Aetna's payouts by reducing hospital complication rates; and second, to help IBM secure a piece of the nearly $30 billion in government EHR subsidies that are being dangled before doctors and hospitals.

Of course, it would be great if physicians were rewarded for quality, rather than volume, and if complications and readmissions were reduced. But, with few exceptions, the payers have not wanted to invest in health IT, because they view the connection between the use of that technology and cost savings as too tenuous. And on the occasions when they have stepped up to the plate, the results have been underwhelming. For example:

Several years ago, WellPoint offered to provide free e-prescribing software and hardware to doctors or to give them computer equipment. Few physicians opted for the e-prescribing systems.
The Hawaii Medical Service Association, a Blues plan, subsidized e-prescribing for 600 doctors and offered a 40 percent discount on a leading EHR to them and other physicians, with very modest results.
Massachusetts Blue Cross Blue Shield anted up $50 million to help the Massachusetts eHealth Collaborative wire three communities and provide interconnected EHRs to all 600 doctors in those towns. Five years after its launch in 2004, MeHC was still installing the systems, and the state was considering adding another $15 million to fund the project.

All things considered, it's actually not surprising that so few insurers have ventured into the murky waters of health IT. But, if the government's big EHR initiative yields disappointing results, the private sector may have to step into the breach if the health plans really want physicians to improve the care they provide.

Image supplied courtesy of Wikimedia Commons.
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