Regional Health Information Organizations: Business, Organizational and Legal Issues

manattmanatt | phelps | phillips

AHRQ Annual MeetingJune 9, 2005

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

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Table of Contents

Realities RHIOs: Emerging Policy Issues RHIOs: Emerging Business Plans Emerging Models for Advancing

HIT/HIE RHIOs: Financing, Formation and

Governance RHIOs: Lessons From The Field

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Realities Framework for Strategic Action Issued but

Federal Agenda Still Emerging NHIN: Waiting to hear federal response to

submissions RHIOs: Still nascent concept with great variation as

to mission, goals and technology plans “If you have seen one RHIO, you have seen one

RHIO”

Funding Sources are Scarce, Especially for Early Development Stage, But Some Notable Exceptions

Big Question: Whether Potential Benefits of HIT/HIE Can Overcome Competing Agendas and Priorities

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RHIOs: Emerging Policy Issues

No Federal guidelines at this point, but likely to emerge in the next several months; field will evolve over time

Federal definition of RHIOs like to focus on four areas Public Trust “Harmonization” of State/Local Privacy Issues Security Aligned Financial Incentives

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RHIOs: Emerging Policy Issues Key issues to be defined with respect to

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

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RHIOs: Emerging Policy Issues Federal role likely to be permissive

encouraging innovation in marketplace, while seeking to promote federal goal of interoperability through National Health Information Network

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RHIOs: Emerging Business Plans

Potential Outsource Partners exist

Source: HealthAlliant

Regional Health Information Organization

InformationTechnology

ClinicalProcess

Improvement

Financing

•Development•Operations

• Security•Training • Support•NHIN Compliance

•Clinical Guidelines

•Operations• Implement• Training• Support

•Performance goals

•Incentive structure

•Coordination of payers and employers

• Capital

Regulatory Decisions

PublicRelations

•Privacy and security standards

•Operating standards

•Core data set•Clinical protocols

•Data use rules

•Marketing Strategy•Communication Plan

•Website management

•Media management•Performance publication

•Patient advocacy

•Patient involvement strategies

Incentives ConsumerParticipation

RHIOs are regional entities which support the development, implementation and application of secure

health information exchange

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RHIOs: Emerging Business Plans

CareSpark (Tennessee) Indiana Massachusetts

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What Is CareSpark?

CareSpark is a not for profit organization commit committed to better health in the central Appalachian region through collaboration, innovation, and wise use of health information 10 year history of health improvement projects Regional leaders concluded major improvements

require regional health information exchange (HIE) 2 ½ years on current project; $600,000 raised in 9

months Filed for 501c3 not for profit status

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CareSpark Tactical Plan

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

screenings) Chronic disease management

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Indiana Health Information Exchange

Data management

Hospital

Data repository

Health Information Exchange

Network applications

Server

Payers

Labs

Outpatient RX

Physician office

Ambulatory centers Public health

Data access and use

Hospitals

Physicians

Labs

Publichealth

Payer

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

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

• Results delivery

• Surveillance• Reportable conditions• Results delivery

• Secure document transfer

• De-identified, longitudinal clinical data

Researchers

Payer

Source: IHIE

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Massachusetts: Pilot Project in 3 Communities

• Quality• Cost• Productivity• Etc.

Connectivity

Clinical IT implementation/

support

Evaluation/ transformation

• Quality measurement• Pilot evaluation• Transformation models

• Clinical access to data• Data gathering and

aggregation• Communication

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

Intra-community connectivity

Management & coordination

• Joint oversight and decision-making bodies

• Structure, composition, process

ICCC

PSC PSC PSC

Source: MAeHC

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Emerging Models for Advancing HIT/HIE

Grassroots Convener Catalyst Operator

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Emerging Models for Advancing HIT/HIE

Grassroots No Statewide, Coordinated Effort Driven entirely at local level – truly “allow a

thousand flowers bloom” Examples

Connecting for HealthAHRQ Patient Safety and HIT Grantees

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Emerging Models for Advancing HIT/HIE

Convener Essential Tasks: Educator, Convener,

Information Clearinghouse, Researcher Examples

North Carolina Health Information and Communications Alliance

MAShareMarylandFlorida

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Emerging Models for Advancing HIT/HIE

Catalyst Essential Tasks: Facilitate financing, provide

technical assistance and project development support to spawn regional initiatives

Examples Under consideration in New YorkKentuckyHealth Tech/Manatt Report: “Spending Our

Money Wisely” Recommendations

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Emerging Models for Advancing HIT/HIE

Operator Essential Tasks: Create financing vehicle and

build infrastructure for information exchange Examples

Indianapolis Regenstrief InstituteMassachusetts eHealth Collaborative

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RHIOs: Financing, Formation and Governance Reviewing legal options necessitates a

multi-faceted process involving an analysis of: The key business decisions that first need to be made in

order to define the organization’s mission and scope The range of options facing the organization relative to:

Governance StructureTax Status of Legal EntityTerms and Conditions of Participant Agreements

20Source: SBCCDE, CITL, Gordian Project analysis

Redundancy

Treatment

Errors

Diagnostic

EMR HIE CDS

Patient Data

Medical Knowledge

50% of Cost20% of Return

100%

RHIOs: Financing, Formation and Governance

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RHIOs: Financing, Formation and Governance

% of Savings Captured by

11%89% Physicians

Source: Center for Information Technology Leadership, 2003

Ambulatory Computer-based Physician Order Entry

Private PayersMedicareMedicaidSelf-insuredSelf-pay

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RHIOs: Financing, Formation and Governance

Purchasers PhysiciansEnrollment Fee

CareSparkGain Sharing

Technology

Gain Sharing

Purchaser Savings

Source: HealthAlliant

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Classes of Membership -- Categories of interested participants (e.g., institutional providers, physicians and medical groups, other clinicians, managed care companies and insurers, local employers, public health agencies, public representatives) could be divided into “classes” and represented on the governing body by one or more representative members.

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

RHIOs: Financing, Formation and Governance

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RHIOs: Financing, Formation and Governance

Virtual Model -- No new legal entity is formed; rather, the project is operated under a contractual arrangement via (a) a “hub-and-spoke” format (see e.g., original Santa Barbara design), or (b) a single agreement among the participating parties (see e.g., original Indianapolis design).

Non-Profit Corporation Model -- A non-profit corporation is formed to be the development and/or operating company for the project. It could be organized to qualify as a 501(c)(3) tax-exempt organization; or it could be a taxable non-profit. It could have only a governing board, or it could have "members" (comparable to stockholders) who elect the governing board and/or have the right to vote on certain (but not all) matters affecting the corporation/project.

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RHIOs: Financing, Formation and Governance For-Profit Corporation Model -- A for-profit corporation is formed to be the

development and/or operating company for the project. The corporation would have stockholders (who could consist of one or more classes - representing different levels of "investment", with different voting rights), who would in turn elect the members of the board of directors.

Limited Liability Company Model -- A limited liability company is formed to be the development and/or operating company for the project. The operating agreement for the company would provide who holds what economic interests in the entity and their respective rights, as well as the role of a governing body (if any) distinct from the equity owners.

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RHIOs: Lessons from the Field

Importance of Leadership and Creating Shared Vision Among Key Stakeholders Organization of Project - Needs to be interdisciplinary and inclusive

Clinical Legal/Organization Financial Technology Communications

First step is creating strategic business plan: this will drive all future steps Structure of organizational vehicle may minimize legal complexity - multi-stakeholder

not-for-profit structure, with independent decision making body, will significantly reduce concerns regarding fraud and abuse and antitrust

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RHIOs: Lessons from the Field

State law privacy issues may present larger hurdles to project than HIPAA Largest and most complex issues involve:

Defining role of RHIO as compared to and in relation to role of stakeholders contracting with the RHIO

Creating financing plan for the project; Think of financing as occurring in three stages: Planning Development Operations

Note RHIO may enable financing of certain information technology investment by outside entities; this capital/operating cost will be borne by the outside entities, not the RHIO itself.

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Conclusion

“We are almost out of tricks here. The only thing left is to reduce the illness burden on

society. Eliminating errors in the healthcare system through HIT is

the best way to do that.”

-Anonymous Commentator