By John Reichard, CQ HealthBeat Editor

August 6, 2013 -- The hospital industry is praising Medicare officials for wielding their regulatory powers to lessen fiscal 2014 cuts to facilities that treat large numbers of poor people.

But industry groups didn’t have much else good to say about the final Medicare hospital inpatient payment rule.

The health law requires cuts in Medicare and Medicaid “disproportionate share hospital,” or DSH, payments because millions of uninsured people will get health benefits under the law.

These DSH payments offset some of the costs to hospitals of treating patients who are unlikely to pay their medical bills because their incomes are so low. But because of expanded coverage under the health law (PL 111-148, PL 111-152) fewer people should be unable to pay and DSH payments are scheduled to drop.

However, hospitals say it’s a different story now that coverage under the law is expected to expand more slowly. That’s because the Supreme Court’s 2012 ruling on the health law made Medicaid expansion optional, and because the Obama administration delayed the start of the employer health coverage mandate until 2015.

The Centers for Medicare and Medicaid Services (CMS) is listening, at least to a point.

“We appreciate that CMS decreased the size of the overall cut to DSH spending—cutting nearly $550 million in fiscal 2014, as opposed to the proposed cut of $1 billion,” said Linda E. Fishman, senior vice president with the American Hospital Association (AHA). But Fishman said language in the rule intended to clarify the criteria for a hospital inpatient admission that is covered by Medicare Part A—and not by Part B governing outpatient services—isn’t satisfactory.

“This final rule is unlikely to reduce the number of appeals of Part A claim denials, which CMS said was one of the primary goals of its rulemaking,” Fishman said in an Aug. 2 AHA statement. AHA said it intends to pursue litigation relating to the issue.

Another hospital group, Premier Healthcare Alliance, wasn’t happy about it either. The new criteria “do not provide any protections from burdensome audits and appeals, and require providers to have a sixth sense and predict the future treatment needs of patients,” said Blair Childs, the group’s senior vice president. “Moreover, these changes add insult to injury, imposing an associated 0.2 percent payment reduction to offset what CMS believes will be an increase in inpatient volume.”

CMS said in announcing the rule that “if a physician expects a beneficiary’s surgical procedure, diagnostic test or other treatment to require a stay in the hospital lasting at least two midnights, and admits the beneficiary to the hospital based on that expectation, it is presumed to be appropriate that the hospital receive Medicare Part A payment.”

John Reichard can be reached at [email protected].

By John Reichard, CQ HealthBeat Editor

August 9, 2013 -- States that have launched their own insurance exchanges are taking seriously their power to customize those marketplaces, a Georgetown University professor said at a Capitol Hill forum Friday.

States, for example, are moving more quickly to provide consumers with information on the quality of health plans sooner than they have to under the health law, Sarah Dash, a professor at Georgetown’s Health Policy Institute, said at the Alliance for Health Reform/Commonwealth Fund event.

Seventeen states and the District of Columbia have chosen to establish their own exchanges, Dash noted in an analysis she conducted with other Georgetown researchers.

Nine states plan to display quality data on their exchanges in 2014, in most cases showing the performance of participating plans on national quality measures. However, some of the nine, including New York and Rhode Island, are either developing their own metrics or incorporating existing state-specific measures.

The health law (PL 111-148, PL 111-152) doesn’t require quality data until 2016, Dash said.

Do-it-themselves states also are ahead of the federal government on developing marketplaces for small employers, she said. The federal exchange won’t require an employee choice option in its marketplace for small employers until 2015. In 2014, employers will have a choice of plans, but their own workers won’t. But the employee choice feature will be a part of nearly all of the small-employer marketplaces established in 2014 by the states.

Nine states chose to limit the number of plans an individual insurer could offer. The limits were designed to give consumers a more manageable set of choices.

Thirteen states chose to establish both a navigator and an in-person assistance program. “To initially fund navigator programs, nine exchanges planned to use state funds or private grants until exchange funds become available,” said the study. Every state exchange allows agents or brokers to help consumers enroll through the exchange.

Ten of the states are relying on assessments on insurers to fund their marketplaces in the long term. Eight of the marketplaces haven’t decided on a long-term source of revenue.

Two jurisdictions—Vermont and the District of Columbia—are requiring that all individual and small group coverage be sold through their exchanges, not on the outside. Maryland and Massachusetts allow health coverage to be sold outside of the exchange but are mandating that certain insurers who sell in the small group or individual market have to also participate in the exchange or submit a bid to do so.

And several states acted to keep insurers from popping in and out of their exchanges. Colorado, New Mexico, New York and Oregon bar an insurer from entering their exchanges for up to two years if they do not join the first year, 2014. And Colorado and Connecticut prohibit an insurer from re-entering the exchange for two years if the insurer voluntarily opts out of the marketplace.

The health law requires that insurers participating in an exchange offer at least silver and gold level coverage. These metal rankings correspond to the generosity of coverage. The other metal options under the law include platinum and bronze level coverage, as well as catastrophic policies.

California, Massachusetts, and New York require plans to offer or propose coverage in all five levels: catastrophic, bronze, silver, gold and platinum. Vermont requires plans to offer all the levels except catastrophic. Connecticut, DC, Maryland, and Oregon require participating insurers to offer at least bronze, silver, and gold, and Kentucky requires at least catastrophic, silver, and gold.

John Reichard can be reached at [email protected].  

By John Reichard, CQ HealthBeat Editor

August 7, 2013 -- A proposal issued Wednesday by the Office of Personnel Management (OPM) may put to rest fears of a brain drain on Capitol Hill stemming from a pending switch of many congressional staff members from the federal health benefits program to the new health law exchanges.

But it could also create new administrative headaches and office morale issues for lawmakers, since at least some aides might be able to hang on to their familiar coverage in the Federal Employees Health Benefit Program.

That’s because the broad language in the health care law, as interpreted by the OPM, would require members to decide whether a staff member works for the “official office” of the lawmaker. If not, the staff member would be exempt from the requirement to get insurance through the exchange. For example, leadership staffers could in at least some instances be exempt from the new marketplace.

That raises the specter of congressional offices filled with employees with varying health insurance coverage.

The Office of Personnel Management on Wednesday morning announced a proposed rule that clarifies that the federal government will continue to contribute to the cost of health insurance premiums for members of Congress and congressional staff in 2014, at the same level that contributions have been made in the past through the federal employees health benefit program.

But the proposal leaves it to “the employing office of the member of Congress” to determine whether an employee meets the statutory definition of who the health care law (PL 111-148, PL 111-152) requires go to an exchange for health insurance, the personnel agency said.

The law says that staff who must use the exchanges include those who work for the “official office” of a member of Congress, whether full-time or part-time, regardless of whether they work in Washington, D.C. or outside. Enrollment in the exchanges, or marketplaces, begins Oct. 1.

The federal contribution toward premiums paid to exchange plans “is no more than would otherwise be made toward coverage under the Federal Employee Health Benefit Program,” an OPM news release states. “OPM will apply the same employer contribution amounts up to 75 percent of the total cost of the health plan premium on the Exchange, the same as for an FEHBP plan,” says a question and answer document the agency released.

Currently, members and aides get their coverage through FEHBP, which offers a choice of scores of health plans. Exchanges offer a more limited choice, but having fewer options could make selection more manageable, and the marketplaces will have new websites that could ease comparison shopping, exchange officials say.

Under the proposed rule, each member of Congress or congressional staff member would purchase plans for individual coverage in the exchange for the state where he or she resides, the OPM says. That means members would go to their home state exchanges. It’s likely that a large percentage of aides would rely on exchanges in the District of Columbia, Maryland, and Virginia.

One of the unresolved questions before the proposal was announced was whether leadership or committee staff would be required to go to the exchanges. An OPM fact sheet states that “because there is not an existing statutory or regulatory definition, OPM believes Congress is best able to make the determination as to whether an individual is employed by ‘the official office of the Member of Congress.’”

That apparently means that committee leaders would determine which of their staffers are part of their “official office” and therefore required to go to exchanges. The same is true of leadership offices. That means the determinations of where staff members get their coverage could vary from committee to committee, and among leadership offices.

“OPM’s understanding is that congressional staff often have allocated to them a percentage of work as personal staff and a percentage of work as committee or leadership committee staff,” the proposed rule says. “It also is common for the percentage to change during the year. Moreover, staff are often unaware of these percentages or budgetary source of their compensation. OPM believes that allowing the employing office to make the determination as to whether particular individuals are employed by the “official office” is most appropriate, and will allow such determinations to be made by the office of the Member of Congress, which is their employer.”

Members would have to designate by Oct. 1 of each year whether a staff member is employed by his or her “official office.” This year only, members would have until Nov. 1 to make the designation.

‘Brain Drain’ Fears
Without the normal contribution the federal government pays for the health insurance it provides to employees, members of Congress had feared that staff would have been forced to pay all or most of their health insurance costs. Lawmakers and aides said that would cause an exodus of staff to take jobs with better benefits, causing a “brain drain” on the Hill.

The issue was created by language in the health care law that requires lawmakers and aides to get their coverage in 2014 through the new insurance exchanges opening Oct. 1 in the 50 states and the District of Columbia. The language was silent on whether the federal government would continue to pay most of the insurance costs of lawmakers and aides, as it does now under the FEHBP.

“Put in plain English, I don’t think that a hardworking legislative staffer should take a $10,000 pay cut or lose their health insurance,” Rep. Robert E. Andrews, D-N.J., said last week. “It was never the intention and the rule respects that.”

But talk of exempting some staff members from going to the exchanges at all stirred controversy that lawmakers were setting one standard for the American people and another for their own employees. “What we believe is that the members of Congress and our staff ought to be treated just like the American people,” Rep. Tom Price, R- Ga., said in a news conference Aug. 2.

However, other Americans were not facing a 2014 in which the health law specifically stripped them of their employer-sponsored coverage. That would have been the case for members of Congress and their staffs without rulemaking to clarify that current federal contribution levels would continue after the switch from FEHBP to the exchanges. To the extent they would have been able to keep coverage, they either would have had to pay all or most of the cost; relatively few would have incomes that would have qualified them for tax subsidies to buy exchange plans.

Also, relatively few Americans are actually required to use exchanges because the vast majority has employer-based insurance. And only a small percentage is likely to go to the exchanges during the first year.

“Most Americans will not be covered through the exchanges,” Washington and Lee University Law School Professor Timothy Jost noted in a blog post Wednesday on the website of the journal Health Affairs. Instead, they “will continue to receive health insurance through employer-sponsored insurance or through government programs like Medicare or Medicaid.” Jost added that “only one group of Americans is required to purchase insurance through the exchanges: members of Congress and their personnel staffs” (He noted though that those who are eligible for subsidies to buy coverage must do so on exchanges.)

The Congressional Budget Office (CBO) estimates that 7 million out of 274 million non-elderly Americans will get insurance through exchanges in 2014, which is 2 percent of all non-elderly Americans. By 2020, the figure climbs to 26 million Americans, or 9 percent of the non-elderly, CBO said.

Controversy Not Put to Rest
The White House was under heavy pressure from both Democrats and Republicans to address a possible flight of aides from the Hill—but Wednesday’s proposed rule may not head off previous criticisms, while also sparking new ones.

“While the Administration has handed out waiver after waiver and exemption after exemption for the well-connected in Washington, they have done nothing to lower healthcare costs for families in Michigan,” House Ways and Means Committee Chairman Dave Camp, R-Mich., said in a statement commenting on the proposal. “If the law doesn’t work, and it doesn’t, then we ought to delay the entire law for at least one year.”

If adopted as proposed, the rule also may create administrative headaches and possible office morale issues for lawmakers who are forced to designate some staffers as exchange-bound and others as staying in FEHBP.

Also, it wasn’t immediately clear whether or not the switch to exchanges could disrupt some of the existing relationships members of Congress have with their doctors.

While many aides are expected to use exchanges that have plans with local D.C. area providers, lawmakers are expected to stick to exchanges in their home states. If the plans they pick from don’t cover D.C. area doctors, such disruptions could be another issue for supporters of the law to manage.

But the switch to exchanges also creates the possibility that at least some lawmakers and aides warm up to the exchange concept. Mila Kofman, head of the D.C. exchange, said in an interview that she’s “thrilled” that aides are coming to the exchange and that she’s aiming to make it a more consumer-friendly experience than FEHBP is. She plans Capitol Hill briefings to answer questions and smooth the transition.

The proposed rule is scheduled to be published in the Federal Register August 8 and the public will have 30 days to comment on it.

John Reichard can be reached at [email protected].  

By Emily Ethridge, CQ Staff

August 5, 2013 -- It’s a rare day on Capitol Hill when lawmakers from both parties and both chambers cut a deal on a significant policy matter that has long been embroiled in controversy. But just such a compromise has been reached to make the biggest change to the Medicare physician payment system in more than a decade.

If the plan becomes law later this year, it would do away with the long-despised sustainable growth rate formula for doctor reimbursements—and, lawmakers hope, the annual threats and hand-wringing and temporary patches that accompany it.

Repealing the current formula would transform the way Medicare pays doctors and give provider groups relief they have sought for years. Over the past decade, Congress has acted more than 15 times to stop payment cuts called for under the formula, often waiting right up to the deadline—or beyond—requiring a retroactive adjustment. Physicians complain that perpetual uncertainty makes it difficult to manage. And, as a result, they insist they may stop accepting Medicare patients.

Yet, the repeal proposal that has moved furthest, a House bill approved in committee, would replace the current formula with something that is both familiar and unlikely to save money — at least in the near term. Most doctors would probably remain in an enhanced version of Medicare’s fee-for-service system, in which they are paid a specific amount for each service provided, even though the repeal proposal advocates alternative methods of reimbursement. The worry is that, in the end, Medicare might look much as it does now, operating under a system much maligned by economists for rewarding the volume of medical services rather than quality.

“We must change the financial incentives of fee-for-service payment if we are going to bend Medicare’s cost curve,” Joseph Antos, a scholar in health care policy at the American Enterprise Institute, told the Senate Budget Committee at a July 30 hearing.

Change in the Medicare system is far from easy. For the past two years, lawmakers working to replace the payment system have solicited ideas from physicians, provider groups and other stakeholders.

Deadline Pressure
The Senate Finance Committee and the House Energy and Commerce and Ways and Means panels have held a series of hearings and roundtable conversations seeking input on the problems with the current model, and what doctors would prefer instead. The work has continued as a new formula deadline approaches. If Congress doesn’t act to avert cuts scheduled for this year, payments to physicians will be reduced by almost 25 percent on Jan. 1.

A bill produced last month by the Energy and Commerce Committee is intended to give providers more choices and control over their payments—and encourage alternatives to the fee-for-service model. Doctors who want to leave the fee-for-service system could participate in approved alternative payment models, or submit their own alternative payment system for approval by the Centers for Medicare and Medicaid Services.

“During this process, we have had unprecedented engagement with the medical community across the board,” said committee Chairman Fred Upton, a Michigan Republican, during deliberations on the bill.

“Physicians across the country have been actively involved, and we welcome their continued contributions to this process.”

In addition, providers will influence the payments made under the bill’s enhanced fee-for-service system, which would begin in 2019. It would adjust physicians’ payments based on their quality performance under a new incentive program. Performance would be assessed based on quality measures and clinical-practice improvement activities, which doctors and professional organizations such as the American Board of Medical Specialties or the American Osteopathic Association would help develop.

Doctors would be assessed alongside others providing similar services, and the best-performing would be awarded a 1 percent bonus. Low-performing doctors would get a 1 percent reduction in payments.
This system gives providers more input and more influence over their reimbursements. But critics of fee-for-service say that it still encourages providers to provide more services, not necessarily the most appropriate care.

Rep. Allyson Y. Schwartz, a Pennsylvania Democrat who has sponsored an alternative bill to replace the current payment formula, says she is “concerned” the Energy and Commerce measure will maintain fee-for-service as Medicare’s standard policy, although she praises the committee’s repeal efforts.

“While the bill includes exceptions for alternative payment models, Congress should not miss this opportunity to fundamentally transform the current health care delivery system so that it rewards high-quality, high-value, team-based care,” Schwartz says.

Schwartz’s bill, sponsored with Nevada Republican Joe Heck, would maintain fee-for-service as an option but eventually reduce payment rates to physicians who stay in that model. Physicians who move into new payment models would get higher payments on top of their base rates for gains in quality, effectiveness and cost savings.

Alternatives Under Review
Even the alternative payment models contemplated by the Energy and Commerce bill might not result in major changes in Medicare. The Center for Medicare and Medicaid Innovation already runs programs to test new payment and delivery models, several of which might be approved and used under the bill’s system.

The agency currently runs three alternative payment programs for accountable care organizations, groups of physicians that work together to coordinate patient care, plus other initiatives, including one for comprehensive primary care.

Although the House bill would allow physicians to submit ideas for other alternative payment models, it is unclear how many providers would take that route, or whether any of the models would be approved for long-term use.

Jonathan Blum, deputy administrator and director of Medicare at the Centers for Medicare and Medicaid Services, asked the Senate Finance Committee not to backtrack on work the agency has already done to develop new payment systems.

“We have to be mindful that we send consistent signals to the physician community not to start fresh, but to build upon the important work that has already been underway,” Blum said. “We shouldn’t step back; we should step forward.”

Senate Finance members have said they will release a bill to repeal the sustainable growth rate formula sometime this fall, after Congress returns from its August recess.

“Obviously, fixing the SGR [sustainable growth rate formula] is the main objective here,” says South Dakota Republican John Thune. “But we also want to look at what we can do in terms of policy to create a new system that actually works better and rewards value. And so how far we can get into that remains to be seen. And then, you know, the question of how do you pay for it.”

The House bill is silent on the question of how to offset the cost of repeal. The Congressional Budget Office estimates the costs at more than $139 billion over 10 years, although Congress isn’t likely to allow the payment reductions called for under current law to take effect under any circumstance.

The Ways and Means panel, which shares jurisdiction over Medicare, may take up the Energy and Commerce bill in the fall and add provisions to cover the cost of repeal.

Still Seeking Quality
Provider groups seem agreeable to legislation that would continue fee-for-service so long as it repeals the current payment formula and allows physicians to move gradually toward alternative models. In voicing support for the House committee bill, several provider groups highlighted those aspects of the measure.

“By providing a period of stability with positive payment updates to all physicians, as well as incentives to move health care toward a system that rewards quality instead of volume, this legislation has the potential to ensure access to high-quality care for Medicare beneficiaries in the years to come,” said Norman Vinn, president of the American Osteopathic Association, in a statement.

In a letter to Energy and Commerce committee leaders, American Medical Association Executive Vice President James Madera praised the bill for repealing the current formula. And he said it would take “significant steps toward allowing physicians and other health care providers to design systems of care that best serve their patient populations through new and innovative care delivery models.”

August 9, 2013 -- Cost-sharing subsidies in the health care law had barely been noticed in the run-up to full 2014 implementation of the overhaul — until Chairman Joe Pitts grilled Marilyn Tavenner about the issue at a House Energy and Commerce Committee just before the August recess began.

The Pennsylvania Republican wanted to know what plans the Centers for Medicare and Medicaid Services administrator had to alert the public that sequester provisions of the budget control law (PL 112-25) would reduce those subsidies. Tavenner replied that the issue was under discussion at the White House Office of Management and Budget.

It’s a pretty safe bet the public had no idea what those subsidies are.

Exactly what are they? Who gets them? And how much would they be cut by sequester provisions in fiscal 2014, which starts Oct. 1?

First, the cost-sharing subsidies are not the same thing as the health care law’s premium tax credits. The tax credits will help pay monthly premiums charged by plans in the new health insurance marketplaces, which open Oct. 1. The cost-sharing subsidies help pay for such out-of-pocket expenses as deductibles and copays and also are used to lower the total amount someone has to pay for health care in any given year.

Cost-sharing subsidies, unlike subsidies for premiums, are subject to cuts under the sequester provisions of the budget control law.
The premium tax credits will total $920 billion from fiscal 2014 through fiscal 2023, according to a May 2013 estimate by the Congressional Budget Office and the Joint Committee on Taxation.

Who gets these premium tax credits? People with incomes between 100 percent and 400 percent of the federal poverty level, whose employers don’t offer affordable coverage, who aren’t in Medicare or Medicaid, and who go to exchanges to buy coverage. (In states that expand Medicaid, the eligible income for subsidies would be between 138 percent and 400 percent of the federal poverty level.)

The total amount of money the health care law makes available for premium tax credits dwarfs the amount it provides cost-sharing subsidies. But the cost-sharing subsidies aren’t chump change. They’ll total $149 billion from fiscal 2014 to fiscal 2023. That’s 14 percent of the total exchange-related subsidies available under the health care law (PL 111-148, PL 111-152), according to a May 31 Congressional Research Service report. Those subsidies represent about 60 percent of the $1.8 billion in the gross cost of expanding coverage under the health care law.

Who gets the cost-sharing subsidies? They’ll go to a subset of the population eligible for the premium tax credits.

The aim of the cost-sharing subsidies is to reduce the out-of-pocket costs of those who are getting premium tax credits who are hit with heavy health expenditures. The lower the incomes of people in this group, the bigger the cost-sharing subsidy they will get.

Specifically, they’ll have a lower yearly out-of-pocket spending limit as a result of the cost-sharing subsidy. (The annual out-of-pocket spending limits for plans in the exchanges will vary depending on the plan—bronze, silver, gold, or platinum.)

To qualify for a cost-sharing subsidy, an enrollee must be in a silver plan. For those with incomes between 100 percent and 200 percent of the federal poverty level, the silver plan’s out-of-pocket spending limit will be two-thirds lower than the limit for those without a subsidy. Those with incomes between 201 percent and 300 percent of poverty will have out-of-pocket spending limits that are half the full amount. And for those with incomes between 301 percent and 400 percent of poverty, the out-of-pocket limit will be one-third lower, according to a Congressional Research Service (CRS) report issued July 31.

“In other words, greater reductions are provided to those with lower incomes,” the report notes. “In general, this cost-sharing assistance targets individuals and families who use a great deal of health care in a year and, therefore, would have high cost-sharing expenses.”

There’s another way in which the cost-sharing subsidies apply when it comes to people with incomes between 100 percent and 250 percent of poverty. “The practical effect of this cost-sharing assistance is to increase the actuarial value of the exchange plan in which the person is enrolled,” the July 31 CRS report notes. “Actuarial value” refers to the percentage of covered expenses the plan pays. So if a plan has an actuarial value of 60 percent, the plan pays 60 percent of those expenses and the enrollee pays 40 percent.

For those eligible for cost-sharing subsidies, the actuarial value of the plan for those with incomes between 100 percent and 150 percent of poverty is increased to 94 percent; between 151 percent and 200 percent of poverty it rises to 87 percent, and between 201 percent and 250 percent of poverty it increases to 73 percent. The silver plan has an actuarial value of 70 percent. So the cost-sharing subsidies mean that certain eligible applicants in silver plans have lower out-of-pocket spending limits and they also pay lower deductibles and co-payments.

Cost-sharing subsidies, unlike subsidies for premiums, are subject to cuts under the sequester provisions of the budget control law.

During the Aug. 1 hearing, Pitts wanted to know how projected fiscal 2014 sequester cuts in cost-sharing subsidies totaling 7.2 percent would be taken. According to Energy and Commerce Committee staff, Pitts wanted to know, for example, how the actuarial values would change with lower subsidies. Tavenner didn’t say.

According to committee staff, that means when people go to insurance exchanges, they may get incomplete information about the impact of the sequester on the subsidies they’ll get. If decisions on the impact of the sequester on cost-sharing subsidies aren’t made in time, presumably the information that exchange applicants get could be inaccurate.

But it may be that insurers won’t be able to pare back cost sharing to adjust for any reduction in subsidies resulting from the sequester.
At the hearing, Tavenner pledged to get back to Pitts after talking with OMB, and to continue providing information about implementation of the cost-sharing program. “I can commit to providing you information, of course that is our strong preference with the issue of sequestration go away entirely,” she added.

And she said she would provide additional information about the sequester and the cost-sharing subsidies prior to the beginning of open enrollment on Oct. 1.

A footnote in the May 31 CRS report says that sequestration does not change the requirement in the health care law that insurers limit consumer cost sharing.

“Insurers presumably will still have to provide required coverage to qualifying enrollees but they will not receive the full subsidy to cover their increased costs,” the footnote says.

However, an insurance industry official said that “this is all preliminary analysis by CRS, and the administration will need to provide specifics.”

John Reichard can be reached at [email protected].

August 6, 2013 -- Farzad Mostashari, the Obama administration’s driving force behind the move to convince providers to adopt electronic medical records, is stepping down as National Coordinator for Health Information Technology this fall.

Mostashari will continue to serve in his post during the search for his successor, Health and Human Services (HHS) Secretary Kathleen Sebelius said in an email message Tuesday to agency staff. He has been the national coordinator for the past two years.

“It is difficult for me to announce that I am leaving,” Mostashari said in his own email to staff members at the Office of the National Coordinator (ONC). Before being named coordinator, Mostashari was deputy coordinator for two years. “I don’t know what I will be doing after I leave public service, but be assured that I will be by your side as we continue to battle for health care transformation, cheering you on.”

The bubbly, bow-tie-wearing IT chief has been an energetic advocate of Medicare and Medicaid “meaningful use” payments and is credited with rapidly spreading the adoption of health IT. More recently, providers have urged lawmakers to slow down the program as it enters its “stage two,” with regulations designed to foster the exchange of medical data on individual patients between hospitals, doctors and other providers.

Mostashari’s “expertise, enthusiasm and commitment to innovation and health IT will surely be missed,” Sebelius said in her email. She added that his “critical work has not only brought about important improvements in the business of health care, but also has helped providers better coordinate care, which can improve patients’ health while saving money at the same time.”

Mostashari brought to the post a physician’s perspective and first-hand knowledge of the difficulty of adopting IT from his work in New York City where he encouraged primary care providers to adopt electronic records. Among the obstacles to wider IT adoption is the need for providers to adopt systems certified for 2014. “There are formidable challenges still ahead for our community, and for ONC. But none more difficult than what we have already accomplished,” he said.

He noted that the groundwork has been laid for patients to see their own medical records. “Over the next 12 months we will see a great democratization of health information as individuals become empowered to download their own health information” from providers, he said.

“His actions have helped ensure that consumers get the return they deserve for their investment in health IT, as well as access to the secure tools they need to be actively engaged in their health,” Debra L. Ness, president of the National Partnership for Women and Families, said in a statement.

Competing Pressures for Successor
Whomever succeeds Mostashari will face a push by purchasers and insurers to move faster toward data exchange, or “interoperability.” At the same time, the new coordinator will get opposing pressure from hospitals and doctors to move more slowly to interoperable systems that talk to each other.

What may be difficult to duplicate is Mostashari’s vigorous advocacy. “He brought a breadth of technology expertise to the department and, perhaps just as important, brought a great deal of energy,” said Dan Elling, a former GOP aide on the House Ways and Means Committee who now is lobbyist with the law firm Alston and Bird. “He is an excellent promoter of the value of widespread health IT adoption.”

But House Republicans grumbled about the way HHS was implementing the second stage of the three stages of rulemaking that makes up the meaningful use program, which was set in motion under the economic stimulus law (PL 111-5).

“In 2009, when the so-called stimulus law was being debated in Congress, Republicans expressed support for efforts to achieve interoperable health information technology systems,” GOP leaders of the Energy and Commerce and Ways and Means Committee wrote to Sebelius on Oct. 4, 2012. “However, we warned that failure to set a date certain for interoperable standards would put as much as $35 billion in Medicare and taxpayer funds in the hands of providers who purchase and use EHR systems that are not interoperable.”

The lawmakers complained that Stage Two eliminated a Stage One requirement that providers test the ability of their IT systems to exchange information with that of other providers. They also objected that Stage Two only required a provider to electronically transmit to another provider a summary of a medical visit for 10 percent of his or her patients. “We urge you to immediately suspend the distribution of incentive payments until your agency promulgates universal interoperable standards,” the letter said.

Meanwhile, GOP senators including John Thune of Wyoming, Michael B. Enzi of Wyoming and Patrick J. Toomey of Pennsylvania have also questioned whether health IT is leading to more ordering of tests and “upcoding” to bill for more complex care.

Mostashari’s supporters note that medical records and patient data can’t be transmitted electronically until all providers have health IT systems. Rapid and widespread IT adoption has happened under his tenure, they say, though much work remains before all providers, particularly smaller hospitals and physician practices, have the systems.

At a July 24 hearing before the Senate Finance Committee, providers said that in many instances they are still struggling to meet Stage One requirements and urged that they be given more time before those for interoperability in Stage Two kick in. Witnesses urged that the deadline for Stage 2 implementation be moved back from Oct. 1, 2014 to Oct. 1, 2015. But Senate Finance Committee Chairman Max Baucus, D-Mont., gave no sign he favored changing the current deadlines for the stages HHS has set under Mostashari.

Joel White, executive director of the Health IT Now coalition, said Mostashari “did a very good job of pumping up the adoption numbers and ensuring that providers were paid incentives quickly. When you take a look at the adoption rates, the latest numbers are something like 80 percent of hospitals and 50 percent of ambulatory providers” are now getting incentive payments because they’ve purchased systems. “That’s huge considering where we were three years ago.

“Farzad really ushered in the age of adoption of electronic health records,” White added and did an “outstanding” job in that regard. “The next person is going to have to solve the bigger riddle, which is how do we make sure everything is connected. What are people using these things for? The answer is to make Medicare and Medicaid more efficient. Are we there yet? Not by a long stretch. We have tons of work to do on interoperability. I wish he had done more on interoperability, but he pushed I think as hard as he could.”

John Reichard can be reached at [email protected].