Bookmark and Share

May 2009

Electronic Health Records and the States: Spotlight on Maryland and New Mexico

The American Recovery and Reinvestment Act (ARRA) of 2009 allocates substantial funding to states to encourage the adoption of health information technology (HIT).  The Health Information Technology for Economic and Clinical Health (HITECH) Act—within ARRA— authorizes a 100 percent federal match for a share of payments to certain Medicaid providers who meet specific requirements in order to spur the adoption of electronic health records (EHR).   For a provider to receive these payments, the state will need to prove that allowable costs are paid directly to the provider without any deduction or rebate, that the provider is entirely responsible for payment of the EHR technology costs, that the user certifies “meaningful use,” and that the technology is compatible with federal administrative management systems.[1]

While it is clear that states play a key role in facilitating EHR adoption among providers and hospitals through Medicaid incentive payments, it is also clear that HIT preparation work at the state level will not be without challenges, especially with regard to EHRs. According to an article in The Boston Globe, states will face particular challenges posed by differing state privacy laws.  For example, a study to be published in the journal Management Science examined the relationship between state privacy laws and electronic medical records and found that a hospital is 20 to 30 percent less likely to adopt an electronic medical record system when a state has health privacy laws in place.  This is because greater customization of EHR systems—as necessitated by differing state privacy laws—increases implementation costs.[2]

The Center for Health Care Strategies hosted a Webinar in April to discuss HIT provisions within ARRA.  The Webinar highlighted the need for state Medicaid programs to create a strategic plan in order to take advantage of HIT stimulus opportunities.  It provided information about issues for states to consider, such as ways in which states can maximize the investment of HITECH funds, steps that state Medicaid agencies can take to leverage these funds, and how a Medicaid agency can calculate return on investment from statewide HIT initiatives—among other helpful topics.  The Webinar also looked at how the response among states has already varied in the face of potential funding for HIT.  Some states are waiting for the governor and legislature to decide on the state’s general ARRA response, while others have strategically analyzed how they can take advantage of every possible resource to advance HIT, EHRs, and health reform.  Maryland and New Mexico are two states that have already passed laws to help facilitate the establishment of EHR systems.[3]

On May 19, Maryland Governor Martin O’Malley signed a bill (HB 706) that will require private insurance companies to offer doctors financial incentives to adopt EHRs.  While stimulus money goes to Medicare and Medicaid for EHR incentive payments, Maryland is the only state requiring that private insurers provide financial incentives for EHR adoption.  Maryland’s Health Secretary, John Colmers, explained that “there is a great promise in electronic health records, but the greatest promise comes when it’s done in a coordinated fashion, across all of the payers.”  The bill also requires that the state develop a health information exchange that would link all of Maryland’s physicians, hospitals, medical laboratories and pharmacies.  The state already began working on such an exchange last summer when the Maryland Health Care Commission had two different physician groups develop pilot programs to help the state determine how a statewide exchange should function.  The pilot project is set to become operational in a few months.[4]

New Mexico Governor Bill Richardson signed a bill (SB 278) that establishes privacy and security regulations for patients and physicians who decide to participate in an EHR system.  The bill requires that patients give annual consent for their records to be included in the EHR system and also allows patients to learn who has accessed their EHRs.  This specific bill passed as one piece of Richardson's health package.[5]

For more information about ARRA’s HITECH Act as it relates to funding for EHRs, please refer to the previous article “David Blumenthal on How to Spur Adoption of Health Information Technology”.


[1] Hudock, Robert and Patricia Wagner.  Analysis of the HITECH Act’s Incentives to Facilitate Adoption of Health Information Technology, EpsteinBeckerGreen, April 2009.
[2] Johnson, Carolyn.  Digital Medical Records Push Exposes Potential, The Boston Globe, May 11, 2009.
[3] HIT Provisions of the Stimulus Package:  Opportunities for Medicaid, Center for Health Care Strategies, Inc., April 2009.
[4] Brown, Matthew and Kelly Brewington.  Bill Pushes Doctors to Computerize Records, Baltimore Sun, May 19, 2009.
[5] New Mexico Senate Approves Electronic Health Record Bill, iHealthBeat, March 4, 2009.