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Washington -- Funding levels for health information technology programs in President Bush's fiscal 2009 budget have come under fire in recent weeks from some analysts and Democratic lawmakers. They say the proposed investment isn't enough to advance the administration's goal of widespread electronic health record use by 2014.

The $3.1 trillion budget plan would boost spending for the Office of the National Coordinator for Health Information Technology by 9%, or $5.5 million, to $66.1 million. It also proposed keeping HIT funding for the Agency for Healthcare Research and Quality at last year's level of $44.8 million. AHRQ uses these funds to test HIT systems and recommend best practices. The agency would continue focusing resources on information technology investments that enhance patient safety.

At a Feb. 14 Senate Budget Committee hearing on HIT funding, Sen. Sheldon Whitehouse (D, R.I.) criticized Bush for allocating so little money to the technology coordinator's office. Widespread adoption of HIT could save $81 billion, he said, yet the president is proposing much less to achieve it. "If you could make $81 billion and get a 100% payback, that gives you an idea of how off we are in magnitude.

"Despite positive rhetoric and small steps forward, President Bush has largely squandered the opportunity to make meaningful progress on the development and implementation of a nationwide information technology system," he added.

Sen. Kent Conrad (D, N.D.) identified widespread adoption of HIT as a critical way to control health care costs. The U.S. spends 16% of its gross domestic product on health care, a figure which is expected to rise to 37% by 2050. The private sector will be overwhelmed by health care costs if they are not contained, Conrad said.

The lone Republican at the hearing, Sen. Judd Gregg (R, N.H.), did not comment on the president's HIT budget but noted the difficulty posed by the lack of interoperable electronic medical records. Gregg said he had to request federal funding for an interoperable system at a New Hampshire hospital where the systems were so complicated that the staff could not communicate from one department to another.

A Government Accountability Office report released at the hearing concluded that while the Dept. of Health and Human Services has made progress pursuing Bush's 2014 goal, it has not developed a national strategy to reach it. "Given the many activities to be coordinated, such a national strategy is essential," noted Valerie C. Melvin, GAO's director of human capital and management information systems issues, in written testimony at the hearing. Melvin noted that the federal health technology office has prepared a draft health IT strategic plan and expects to release it this spring.

Bush budget documents say HHS concluded that it missed its fiscal 2007 goal of having 18% of physicians adopt minimally functional electronic medical records. According to the department, only 14% did so.

Analysts debate commitment to HIT

HIT experts projected different views about the significance of the budget.

Although the funding level could be higher, Bush's proposal is a good sign that he counts on the next president continuing the technology office's work, said Don Asmonga, director of government affairs for the American Health Information Management Assn.

14% of doctors adopted minimally functioning EMR systems in 2007.

Bush could have recommended zeroing out the office, he said, but the fact that he proposed to fund it through 2009 and into another administration shows his commitment. The office's proposed budget is adequate for current programs, he added.

"It's more of a continued push for coordination to build the infrastructure and standards for future implementation," Asmonga said.

But Laura Adams, president and CEO of the Rhode Island Quality Institute, said the proposed funding level for the HIT office is disappointing. The institute is a public-private initiative to build a health care information exchange in the state. "Five million is woefully inadequate for the promise of what HIT can bring," she said.

The increase should be four or five times higher, given what the return on investment could be, Adams explained. Extra money could fund more research and development projects at the local level.

"It's hard for us to set up a nationwide HIT system if we don't know how to do it at the local level," she said. "There are a lot of local and state HIT projects that struggle to find funding and shouldn't be."

AHRQ's budget should have been tripled, Adams added. The extra money could have been spent on understanding how new technology can be applied at the point of care and developed so every patient receives it.

In the HIT office's budget, Bush proposes a $7.7 million increase, to $21.5 million, for standards harmonization so IT systems can exchange data across different health care settings. The extra money would support the American Health Information Community, the federal advisory board established in 2005 to recommend ways for accelerating technology adoption. The funds also would launch a successor to it once AHIC makes a planned change to become a private-sector organization this fall.

The budget also would increase funding for the Nationwide Health Information Network by $6.8 million, to $26 million. The program will fund nine health information exchanges across the U.S. and develop the best way for consumers to access electronic medical data in a health information exchange. HHS intends to test these entities in September on their ability to work with each other and federal agencies.

But the proposed budget would cut funding for privacy and security programs by $7.6 million, to $10.6 million, because the national coordinator's office will shift away from funding projects addressing barriers to exchanging HIT across states to evaluating such initiatives. The financial blueprint also would cut spending for operations by $1.4 million, to $8 million, through more efficient use of contractors.

Washington -- President Bush's legislation to slow Medicare spending is heavy on provisions related to doctors -- from public quality rankings of physicians in five years to instituting pay-for-performance. But the bill doesn't address Medicare physician pay cuts due to take effect July 1.

James King, MD, president of the American Academy of Family Physicians, said Medicare pay reform needs to be a higher priority for the administration. "They have to come to terms with how they're going to pay physicians, where the money is going to come from and [how to] pay toward what they want to accomplish." The American Medical Association is working to prevent the 10.6% pay cut scheduled to kick in for the last six months of 2008.

Bush was required by the Medicare Modernization Act of 2003 to offer a proposal to rein in program spending. The act mandates that the president submit a Medicare reform plan if, for two consecutive years, 45% of the program's funding was projected to come from general tax revenues instead of dedicated payroll taxes or premiums within six years. The Medicare trustees projected in 2006 and 2007 that this would happen.

"This legislative package ... would take the first step of responding to the funding warning in the trustees' 2007 report," wrote Health and Human Services Secretary Mike Leavitt in a letter to House and Senate leaders. "Perhaps more importantly, it would begin to address the long-term challenge and lay the foundation for the comprehensive Medicare reforms that are necessary to strengthen and improve the program for future generations."

The bill, released Feb. 15, calls on Leavitt to work toward wider adoption of electronic medical records. It does not elaborate on Bush's long-standing goal of having a national health information network by 2014.

The provision on quality rankings would require HHS to publish reports on physicians, hospitals and health plans by 2013 for 50% of treatment paid for by Medicare.

The bill, called the Medicare Funding Warning Response Act of 2008, also reintroduces a medical liability proposal similar to a measure Congress failed to adopt in 2006. It would cap noneconomic damages at $250,000 and limit punitive damages to the greater of $250,000 or two times noneconomic damages. Leavitt said this would limit Medicare spending by discouraging defensive medicine.

Bush also proposes increasing Part D premiums for the wealthiest 5% of the 25 million drug program enrollees, starting with those earning $82,000 per year and couples making double that. AARP Advocacy Director David Sloane said the group objects to increasing beneficiaries' Part D cost sharing, especially because income levels used to calculate their new costs wouldn't be adjusted for inflation.

Congressional reaction to Bush's measure was split. Rep. John Dingell (D, Mich.), chair of the House Energy and Commerce Committee, said the bill wouldn't improve Medicare but would make seniors pay more for it. He also said the 2003 Medicare reform act's 45% threshold is an arbitrary Republican scare tactic designed to justify program cuts.

Sen. Max Baucus (D, Mont.), chair of the Senate Finance Committee, welcomed some of Bush's ideas. Baucus said he will not include the increased Part D cost sharing or medical liability proposals in Medicare reform legislation he's planning to introduce this spring. But he said he sees room for bipartisanship on better linking cost and quality in Medicare treatment.

"Value-based purchasing and health information technology are both smart targets for reforms in Medicare right now," he said. "But in the end, dealing with the rising cost of Medicare will mean controlling costs across our health care system as a whole."

Rep. Joe Barton (R, Texas), the senior Republican on Energy and Commerce, said the Bush bill deserves hearings. "The politically charged swirl of the 2008 presidential election campaign doesn't lend itself to good policymaking, but our committee should take the lead in doing what can be done -- hearing experts, establishing facts and exploring possibilities."

At press time, the Congressional Budget Office hadn't released an estimate of the bill's savings. Leavitt said the Part D cost-sharing provision would save $3.2 billion over five years by lowering federal premium subsidies. The average Part D plan costs beneficiaries $25 per month, said Centers for Medicare & Medicaid Services spokesman Jeff Nelligan.

Performance pay is complicated

The pay-for-performance provision in Bush's plan calls for HHS to use a portion of existing Medicare funding to reward doctors, hospitals and others based on "well-accepted" quality and efficiency standards. This type of reform is easier said than done, said the AAFP's Dr. King.

To start, gathering the data needed to support pay-for-performance won't be easy without electronic medical records, and EMR adoption won't happen quickly without financial help for small group practices, Dr. King said. The AAFP estimates that 50% of its members will have an electronic records system by the end of 2008, but most of the rest are physicians working alone or in small practices who can't afford these systems.

HHS also must coordinate with private insurance companies on quality standards, Dr. King said. "We really feel the parameters need to be more global. I don't want to do one for Medicare, another one for Blue Cross Blue Shield and another one for Cigna."

Finally, HHS needs to consider using the carrot of additional payments for meeting quality standards and not just the stick of reducing pay to physicians who don't, Dr. King said.

The president's bill would do the latter. "We think that's just inappropriate," Dr. King added.

AMA pay-for-performance principles say programs should ensure quality of care, foster the patient-physician relationship, offer voluntary physician participation, use accurate data and fair reporting, and provide fair incentives.

A legal dispute in Washington state has doctors worried that their ability to employ other licensed medical professionals -- and ultimately compete in health care -- may be compromised.

The owner of a physical therapy group is suing an orthopedic practice, saying the doctors are profiting illegally from referrals they make to physical therapists who work for them. Columbia Physical Therapy also claims that state law prohibits Benton Franklin Orthopedic Associates in Kennewick, Wash., from hiring physical therapists at all. Both sides are asking the Washington Court of Appeals to clarify the issue. Judges have yet to decide whether to accept the case.

The Washington State Medical Assn. disputes Columbia's legal interpretation. Tim Layton, the association's director of legal affairs, said state law "permits [doctors] to employ other providers and to make a profit from those employees for providing their services. It's been going on for years and helps make the practice of medicine more efficient because within one particular group, you can have a number of professionals providing services to patients."

The WSMA, with the American Medical Association/State Medical Societies Litigation Center, is helping Benton Franklin Orthopedic with financial and legal resources. Doctors say the legal threat is aimed at cutting competition from physician practices.

"This litigation must not be allowed to infringe on physicians' freedom to determine how their practice can provide optimal care," said AMA Board Trustee Cyril M. Hetsko, MD. "Undermining this prerogative would inhibit innovation and fair competition." It also would restrict patient choice and continuity of care.

But Darrin E. Bailey, Columbia Physical Therapy's attorney, argues that it is doctors who are stifling competition. Arrangements in which doctors employ physical therapists "create a captive referral market where the referring physician controls both the supply and the demand for patient services," he said.

Bailey also said the case is limited to doctors' relationships with physical therapists and unlikely to affect other areas. Apart from the anti-kickback statute, state law outlines 21 different types of medical professionals -- such as nurses and osteopaths -- whom doctors can hire when they form a business of their own, he said. It's "no accident" that physical therapists are left off that list, he added.

Even if doctors could employ physical therapists, "the courts here have already held that under the anti-rebate statute, physicians must have direct supervision [over patient care], and in this case [the physical therapists] are not even in the same building as the doctors," Bailey said. He added that the arrangements give physician practices little incentive to improve quality and instead can lead to overutilization and higher costs.

Doctors disagree

But Benton Franklin Orthopedic's attorney Michael H. Church said the relationships do not trigger the anti-kickback statute because the doctors are not referring patients to a third-party entity with which they are not actively involved.

"It's perfectly legal for doctors to employ anybody they want to assist in the delivery of health care," he said. "Any time [doctors] or [their] employees are performing a fee for service, there's no implication that there is a rebate at all."

Church likened the situation to doctors providing a prescription -- in this case for physical therapy -- to patients who have been under their care, rather than a referral. If a patient doesn't already have a physical therapist, Benton Franklin Orthopedic provides him or her with a list of choices of where to go, he explained.

"Even if you take the profit out of it, it's physical therapists providing care under the immediate direction of the physician," Church said. Columbia Physical Therapy's claims ignore a separate part of state law specifically giving physical therapists the right to choose where they want to work, whether in a doctor's office, hospital or physical therapy clinic, he added.

Doctors worry that if the court grants special protection from competition to physical therapist clinics, it could hurt relationships with other medical professionals. "If physicians can't employ physical therapists, nobody can, and they are used in all sorts of medical settings," Church said. "Where do you draw the line as to who physicians can employ?"

A class-action lawsuit filed on behalf of more than 100,000 poor and uninsured patients spotlights the chronic deterioration of access to care in the aftermath of Hurricane Katrina -- and the need to restore it fast, say some New Orleans-area physicians.

A group of patients formerly treated at Charity Hospital, which was crippled in the 2005 storm, are challenging Louisiana State University over its decision to close the facility for good. The university's Health Care Services Division is in charge of the state-funded public hospital system in Louisiana. At press time in mid-February, the court had not certified the case as a class action.

According to the suit, filed Jan. 17, state law requires LSU to get legislative approval before shutting down any public hospitals or significantly reducing services. Patients allege that university officials failed to do that when they decided not to reopen Charity, which provided free primary and specialty care to thousands of low-income and uninsured patients in the New Orleans area.

As a result, Charity patients can't afford or access primary or specialty care without traveling long distances, chronically ill patients are getting worse, and mental health services are severely lacking, said S. Stephen Rosenfeld, a Boston attorney representing the patients.

They are asking LSU either to re-open Charity or to come up with alternatives to renew indigent care, which -- 2½ years after the storm -- remains a fraction of what it was before Charity was shuttered, Rosenfeld said. Even patients with insurance are affected, because the facility's closure has caused long wait times at other facilities. There is a "bottleneck in terms of health care," he said.

Some area physicians agree with the plaintiffs' complaints. The lawsuit follows a similar case a group of doctors at West Jefferson Medical Center brought against the state last April, seeking financial relief for the high levels of indigent care they continue to take on since Charity Hospital's closure. No hearing date has been set.

Emergency departments and doctors' private practices are absorbing a lot of Charity Hospital patients, said James P. Moises, MD, director of Tulane University Hospital & Clinic's emergency department and of emergency medicine at the university's School of Medicine. But the bigger problem is a lack of consistent outpatient care, he said.

"With such limited outpatient access, they bounce from ER to ER or primary care clinic to primary care clinic," said Dr. Moises, who worked at Charity Hospital before and during the storm.

Louisiana State University officials say they are doing all they can to shore up access to care in New Orleans and that Charity Hospital's fate was out of their hands.

"The fact is LSU didn't close Charity. Hurricane Katrina closed Charity," said Fred Cerise, MD, LSU's vice president for health care and medical education. "Now we are trying to deal with what's the best way to provide services in the aftermath."

He pointed to two Louisiana House and Senate resolutions adopted in 2006 and 2007 recognizing that Katrina forced Charity's closure when its bottom floors flooded. The measures also endorsed a plan to replace the hospital with a new facility in downtown New Orleans. Those plans are under way, and the facility is projected to open in 2012.

Meanwhile, LSU opened an interim charity facility in an office building and revived a majority of its satellite primary care and specialty clinics, said Dr. Cerise, former secretary of the Louisiana Dept. of Health & Hospitals. A major hurdle to restoring indigent patients' access to pre-storm levels is an overall shortage of doctors, nurses and other medical personnel.

LSU also has redirected state funds to other hospitals in the state, where many medical professionals and patients relocated, he added.

Doctors and patients contend that these efforts are not enough and say LSU is putting its interest in building a new hospital ahead of more immediate health care needs.

"There may need to be a new facility, but this is about what happens in the meantime," said Rosenfeld, the patients' lawyer. "To ignore the enormous need is simply improper."

Patients are asking the District Court for the Parish of Orleans for an independent evaluation of Charity Hospital's condition. They say this step was required under the 2006 House resolution but never done.

Internist F. Brobson Lutz, MD, a former director of New Orleans' Health Dept., said access to mental health services is "the most drastic area of concern." He said Charity Hospital's upper floors could house a psychiatric unit.

Dr. Moises said it would cost less to bring Charity Hospital back, as well as develop other potential sites, than to build a new hospital. "We need to re-establish access, and not in 10 years. We need to really address it, not just with Band-Aids."

The state's attorney general says out-of-network payment rates are based on a faulty database designed to undercut the real "usual, customary and reasonable" rates.