Claims assessment to fund health infomation exchange

From Clinfowiki
Jump to: navigation, search

Claims Assessment funds HIE

Health insurance companies, third-party administrators and pharmacy benefit managers doing business in Vermont have started paying a claims tax to fund health information infrastructure, electronic medical records for independent primary care practitioners, and a statewide medical home project.# The tax, implemented Oct. 1, 2008, is thought to be the first of its kind in the country. Vermont uses this claims tax revenue to fund health information technology and health information exchange.

At .19%, the fee is expected to raise $32 million over seven years. Funds are managed by the Vermont Secretary of Administration and distributed to qualified parties via grants to state government entities and via a non-profit, public-private partnership called Vermont Information Technology Leaders, Inc .# Grants of up to $45,000 will be made to qualified independent physicians, and additional technical assistance for electronic health record deployment will be offered. Providers who do not fully utilize the electronic medical records paid for by the grant will have to repay the funds. Part of the money raised will also go to fund a statewide health information exchange. The official legal opinion provided to the State of Vermont from ERISA attorney, Patricia Butler concerning ERISA preemption issues makes a strong case that Vermont’s tax will survive any ERISA challenges.

This model for financing health information exchange is appealing on many fronts, and could arguably be emulated in Oregon. Among the factors that support its adoption are that Vermont’s novel approach is transparent, equitable, broad-based and sustainable. A broad-based financing model supports the premise that health information exchange is a public good and should be paid for by all. In addition, the assessment is levied on health insurance companies and the self-insured entities that are most likely to benefit financially from health information exchange.#

Factors weighing against the adoption of this model include expected opposition by health insurance companies, self-insured businesses and third-party administrators. Commercial health insurance companies in the 2009 Oregon Legislative session agreed to a 1 percent assessment on commercial health insurance premiums to support the expansion of Medicaid coverage for 80,000 children . Premiums for self-insured businesses and their third-party administrators were not affected by this act. Health insurance executives are apt to resist an attempt to levy a claims tax so soon on the heels of the previous premium tax.

Another troubling problem is that the claims tax would likely be passed through directly to health care purchasers -- the language of the Vermont tax does not prohibit such pass-throughs -- driving up premium prices for health care purchasers and patients. Increases in insurance premiums may lead businesses to opt out of the commercial insurance market, leaving workers to purchase individual health plans or more likely leaving them uninsured. Despite these issues, levying a Vermont-style claims tax ought to be an option that the HITOC and Oregon lawmakers explore, namely as a way to financially support ongoing health information exchange operations, and as a source of EHR grant funds for under-resourced providers and hospitals.

Works Cited

  1. Britton, John. 2009. Oregon Legislative Fiscal Office, Revenue impact statement for HB 2116. Presentation to the Joint Committee on Ways and Means.# 29 May 2009.
  2. Butler, Patricia. “ERISA Implications for TPA Fees in H. 886.” Memorandum to Steve Maier, Chair of the Vermont House Committee on Health Care.” 2 April 2008. Obtained via e-mail.
  3. Remsen, Nancy. “Medical record fees backed.” 3 April 2008. Burlington Free Press. (accessed 22 December 2008)
  4. Vermont Agency for Administration. “Vermont Health Care Information Technology Reinvestment Fee: Guidelines for Insurers.” September 2008. Vermont Agency for Administration. (accessed 9 Jan 2009).
  5. Hayes, Heather. “Vermont trust fund aims at physicians’ EHR adoption.” Government Health IT. 14 July 2008 (accessed 22 December 2008).
  6. Vermont Information Technology Leaders, Inc.: Press Release. “Vermont Legislature Establishes Health IT Fund.” N.D.# Vermont Information Technology Leaders, Inc. <> (accessed 22 December 2008).

Submitted by Robin Moody