Regional Health Information Organizations: Business, Organizational and Legal Issues

1. Regional Health Information Organizations: Business, Organizational and Legal Issues AHRQ Annual Meeting June 9, 2005 manatt manatt | phelps | phillips William S. Bernstein, Esq. wbernstein@manatt.com (212) 830-7282

2. 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

3. 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

4. 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

5. 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

6. 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

7. RHIOs: Emerging Business Plans Regional Health Information Organization RHIOs are regional entities which support the development, implementation and application of secure health information exchange Incentives Consumer Participation Financing Regulatory Decisions Information Technology Clinical Process Improvement Public Relations • Privacy and security standards • Operating standards • Core data set • Clinical protocols • Data use rules • Capital • Performance goals • Incentive structure • Coordination of payers and employers • Marketing Strategy • Communication Plan • Website management • Media management • Performance publication • Development • Operations • Security • Training • Support • NHIN Compliance • Clinical Guidelines • Operations • Implement • Training • Support • Patient advocacy • Patient involvement strategies Potential Outsource Partners exist Source: HealthAlliant

8. RHIOs: Emerging Business Plans • CareSpark (Tennessee) • Indiana • Massachusetts

9. 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

10. 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

11. Indiana Health Information Exchange Data access and use Data management • Results delivery • Secure document transfer • Shared EMR • Credentialing • Eligibility checking Hospitals Payers Hospital • Results delivery • Secure document transfer • Shared EMR • CPOE • Credentialing • Eligibility checking Physicians Health Information Exchange Labs • Results delivery Labs Data repository Network applications • Surveillance • Reportable conditions • Results delivery Public health Outpatient RX Payer • Secure document transfer Payer Physician office • De-identified, longitudinal clinical data Ambulatory centers Public health Researchers Source: IHIE

12. ICCC PSC PSC PSC Massachusetts: Pilot Project in 3 Communities Management & coordination • Joint oversight and decision-making bodies • Structure, composition, process Evaluation/ transformation • Quality measurement • Pilot evaluation • Transformation models • Quality • Cost • Productivity • Etc. Intra-community connectivity Connectivity • Clinical access to data • Data gathering and aggregation • Communication • Hardware/software • Implementation/tech support • Systems integration • Workflow redesign • Decision support Clinical IT implementation/ support Source: MAeHC

13. Emerging Models for Advancing HIT/HIE • Grassroots • Convener • Catalyst • Operator

14. 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 Health • AHRQ Patient Safety and HIT Grantees

15. Emerging Models for Advancing HIT/HIE • Convener • Essential Tasks: Educator, Convener, Information Clearinghouse, Researcher • Examples • North Carolina Health Information and Communications Alliance • MAShare • Maryland • Florida

16. 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 York • Kentucky • Health Tech/Manatt Report: “Spending Our Money Wisely” Recommendations

17. Emerging Models for Advancing HIT/HIE • Operator • Essential Tasks: Create financing vehicle and build infrastructure for information exchange • Examples • Indianapolis Regenstrief Institute • Massachusetts eHealth Collaborative

18. 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 Structure • Tax Status of Legal Entity • Terms and Conditions of Participant Agreements

19. RHIOs: Financing, Formation and Governance Medical Knowledge 100% Treatment 50% of Cost 20% of Return Diagnostic Redundancy Patient Data Errors EMR HIE CDS Source: SBCCDE, CITL, Gordian Project analysis

20. RHIOs: Financing, Formation and Governance Private Payers Medicare Medicaid Self-insured Self-pay Physicians Ambulatory Computer-based Physician Order Entry Source: Center for Information Technology Leadership, 2003

21. Purchaser Savings Purchasers CareSpark Physicians Enrollment Fee Technology Gain Sharing Gain Sharing RHIOs: Financing, Formation and Governance Source: HealthAlliant

22. RHIOs: Financing, Formation and Governance • 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.

23. 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.

24. 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.

25. 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

26. 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.

27. 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