One of the major factors driving up the cost of healthcare is the growth of healthcare providers. Expansive healthcare systems that offer acute care hospitals, specialty facilities, clinics, labs, physician practice groups, and other services are becoming prevalent. While these systems provide many benefits to the communities they serve, they also require a great deal of money to fuel their growth — and ultimately place upward pressure on the costs of many medical services.
The health IT market in the United States is expected to stagnate this year with a slight decline in spending, according to recently released figures from market research analyst firm Frost & Sullivan. Oddly enough, the drain of institutional resources away from commercial IT solutions toward training and staff to ensure compliance with HIPAA (the Health Insurance Portability and Accountability Act) is largely to blame, according to Amith Viswanathan, a health care industry analyst at Frost. He said he expects U. S.
health IT spending to shrink from $36. 7 billion to $36. 2 billion this year. Payer and health care institution spending are each expected to decline a bit to $15. 8 billion and $15. 6 billion, respectively. Viswanathan said he does expect private physician practice expenditures to expand marginally, from $4. 4 billion to $4. 7 billion. Viswanathan attributed this budget expansion to minimal concern on the part of small physician groups about HIPAA compliance. “Private practices tend not to worry about HIPAA compliance so much.
They’re operating under this pseudo-shield of anonymity and rely heavily on their vendors to be compliant,” he said, which allows more of their resources to go toward expanded IT spending. Other said in implementing the HIPAA there would have been costs to Medicaid State agencies and to Federal health plans in manipulating and reformatting their health care provider files and transferring them to CMS for loading into the NPS. There would also have been ongoing costs to Medicaid State agencies and other Federal health plans to obtain Napes for their health care providers under option 2.
In manipulating and reformatting the files, problems could be discovered in some of the health care provider records that would require investigation and resolution. The costs of investigating and resolving these problems were not recognized earlier and, therefore, were not considered in the May 7, 1998, proposed rule. (Phoenix Health Center, 2004) Sorted from the Phoenix Health Systems (2004): The HIPAA have significant impact on the economy, the over all impact analysis according to National Provider Identifier (NPI) amounting to $100 million.
The NPI added the implementation costs and benefits of the NPI were factored into that overall impact analysis. However, that impact analysis used certain assumptions that have not been realized. For example, it was assumed that all of the HIPAA standards would be issued and effective at about the same time, so that covered entities would be making their system changes at one time. For various reasons, standards have been issued and effective over a much longer period of time than expected. For example, the transaction and code set standards were published in 2000 and must be implemented by October 2003.
Security standards are to be implemented by April 2005, and the NPI must be used by 2007. It comply the date cover at an extended period of time, with the estimate part of the overall cost and savings for health plans and health care providers that can be attributed to NPI. There will still be costs and savings related to the implementation of the NPI by health plans and health care providers. These will, however, be small in comparison to those for transaction standards and security. The NPI affects only a small part of the system and business processes for any covered entity.
The estimated that the NPI would entail 10 percent of the costs and 5 percent of the savings for health plans. Health plans would need to make some system changes from their current identifiers to the NPI. They would save in not having to maintain a system of identifiers that exist today. We would estimate that for health care providers, the NPI would represent 5 percent of the costs and 10 percent of the savings. Health care providers need only to substitute the NPI for their current identifier(s).
They reap greater savings by not having to keep track of separate identifiers for each health plan and possibly for each location, address, or contractual arrangement. (However, as noted earlier in this preamble, health plans may require health care providers to use identifiers other than the NPI for uses other than standard transactions. ) All costs of NPS development and operation (which include the costs of enumerating health care providers and maintaining their information in the NPS, and the costs of disseminating NPS data to the health care industry and others, as appropriate) are Federal costs.
As mentioned earlier in this preamble, HHS will contract for system development and for the enumeration, update, and data dissemination activities. We estimate the following costs for operations of the National Provider System (NPS), keeping in mind that the NPS will enumerate both covered and non covered health care providers, and that health care providers are not being charged for obtaining NPIs. (Phoenix Health Systems 2004)
To the Institute of Medicine’s (IOM), the HIPAA implementation would add burdens in the improvement of the health care system, to make changes in health care delivery, insurance, and financing, and to manage the system in a manner that would induce efficient, effective, equitable, accessible and timely health care. Plus the financial incentives within the health care system affect health care quality, costs, and access. ( Bazzoli , Dynan, Burns, Lindrooth, 2000)
It also add expenses on the basic methodological work to support such research, including: development of payment methodologies, improvements in analytical and empirical methods required to simultaneously address issues of efficiency, quality, and equity, and improvement in data collection methods and qualitative methods needed to understand the structure of new health care organizations and an evolving health care system. ( Bazzoli , Chan , Shortell , D’Aunno, 2000) On the other hand, under a captivated system, there is an incentive to under use necessary services. Other reimbursement strategies and methodologies (e. g.
, diagnostic related groups, risk adjustment, carve-outs, tax policies, and physician reimbursement) also can affect the cost and quality of care. Costing often create obstacles to the goal of achieving efficient, high quality care. Payment methods often do not adequately support or compensate health care professionals for providing high quality care, or reward providers for quality improvements. Financial barriers embedded in payment policies “reinforce fragmentation by paying separately according to the setting of care and provider type and by not giving providers the flexibility to customize care for individual patients” (IOM, 2001).
While there has been a great deal of research on the incentives of payment methods with respect to cost and utilization, there has been comparatively little on how payment methods and incentives affect quality of care from the perspective of the provider, patient or family. The IOM’s report, “Crossing the Quality Chasm,” specifically suggests that “private and public purchasers should examine their current payment methods to remove barriers that currently impede quality improvement, and to build in stronger incentives for quality enhancements. ”( Cohen, , Cunningham , 1995)