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Influence of Market Incentives on Exchange of Health Information

The primary mode of payment for health care in the United States is the fee-for-service (FFS) model, which many experts argue incentivizes providers to focus on increasing the volume of services they provide over quality and efficiency of care.9 In recent years, both the federal government and states have taken steps to move away from FFS toward paying providers for health outcomes through value-based purchasing (VBP) initiatives. The shift to VBP, where payment to providers depends on the value of care they deliver, should incentivize providers to adopt more coordinated, team-based approaches to care that necessitate information sharing, in order to improve outcomes while lowering costs; despite some advances, however, the FFS model remains the dominant mode of payment.10

Under the FFS model, many experts posit that providers almost always lack strong financial incentives to share information to achieve efficiencies, such as reducing the number of unnecessary services and better coordinating care.11 For example, health care providers may have concerns that sharing their patients’ health information could facilitate competitors “stealing” patient volumes, which could affect profitability.12 Other health care entities view their patients’ health information as proprietary and have business interests in commodifying its use.13 Similarly, there are challenges related to IT vendors’ willingness to share data because of its value for market leverage as companies enter new business areas.14

In addition to provider payments for care delivery, other funding and incentive mechanisms can significantly influence the market landscape for exchange of health information. In recent years, there has been significant federal investment to encourage the adoption and use of health IT to promote clinical information sharing. In 2009, the federal government passed the Health Information Technology for Economic and Clinical Health Act (HITECH Act) as part of the American Recovery and Reinvestment Act.15 The HITECH Act provided incentives and penalties for certain providers to adopt and meaningfully use electronic health records (EHRs) as well as significant funding to states and territories to enable exchange of health information.16 Although the law provided important incentives to certain providers, it excluded many other providers from eligibility to receive funds and focused funding on infrastructure and startup costs without additional support for ongoing maintenance of systems. The Centers for Medicare & Medicaid Services (CMS) recently issued guidance authorizing new federal Medicaid matching payments to a broader group of providers to facilitate interoperable data exchange, which may help additional providers adopt new technology and participate in information exchange.17

Even with the right economic signals and provider buy-in, significant work remains to optimize the way in which information is shared between providers and improve the utility of the information exchanged. While some data standards do exist, and efforts are underway by private organizations to create clearer and more cohesive standards, there are currently no uniform national standards for exchange of health information.