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Aug. 6, 2012
TOPEKA The board responsible for overseeing the digital exchange of Kansans' health records is scheduled to face Wednesday its biggest decision since it was formed two years ago — whether to dissolve itself and turn its regulatory authority over to a state agency with the goal of saving money.
The decision comes at the same time that health information exchange is beginning in Kansas.
Since 2005, various Kansas groups have wrangled with how best to ensure the privacy and security of patient health information as doctors and hospitals transition from paper to electronic health records. The efforts in Kansas and across the nation picked up speed with the passage of a federal law in 2010 that laid out the national goal of having every American’s medical records available digitally by 2014.
In Kansas, policymakers and medical groups decided that privately owned networks would handle the transfer of digital records over a health information exchange, or HIE.
To regulate the networks, then-Gov. Mark Parkinson created the quasi-governmental Kansas Health Information Exchange Inc. in 2010. The organization was charged with representing the interests of patients, health care providers, employers and insurers in an open process independent of political influence.
The Aug. 8 meeting is scheduled for 10 a.m. at the Kansas Medical Society (map). KHIE board meetings are open to the public.
But agreement on how to fund the exchange's operations remains up in the air. Doctor and hospital groups resisted usage fees to cover the organization’s projected $400,000 annual operating cost.
Last month, state officials presented a plan to absorb KHIE's cost of operations and transfer its regulatory authority to the Kansas Department of Health and Environment.
The plan would eliminate more than half of KHIE's costs and transfer the rest to taxpayers. Under the proposal, the 17-member KHIE board currently appointed by the governor would become an advisory committee appointed by the KDHE secretary.
While several board members have expressed support for the plan's projected cost savings, others have said they aren’t willing to consider it before thorough discussion of the implications for patients, health care providers and others. That could happen Wednesday.
"For this discussion to come up without any prior meaningful consideration of the full board about 'freaked me out,'" wrote Jackie John in an email to fellow board members after the proposal was presented to the board with no notice last month.
"This decision is too important to rush into without giving all the aspects of the decision careful consideration. I believe we need to take some time and make sure we have explored all the options," wrote John, who represents the Great Plains Health Alliance. "To prematurely dissolve the board before we determine the impact on providers, and the future of how the stakeholders will be impacted, would not be advisable.”
A major concern among board members is whether dissolving KHIE as outlined in the KDHE proposal would expose doctors, hospitals and other providers to lawsuits.
Providers who exchange patient information via a KHIE-approved network are granted some immunity from lawsuits should they inadvertently breach patient privacy.
But under Kansas law, that immunity flows from KHIE and would be thrown into question if board members were to pass their regulatory authority to KDHE prematurely, said KHIE's legal counsel, Jeff Ellis.
"My belief is that the act of dissolving the corporation cannot be done by the board, because (KHIE) is created by the executive order,” Ellis said.
Furthermore, Kansas law subsequently was modified to give KHIE certain powers and obligations.
“In this case, the executive order has been turned into statute ... and the statute gives (KHIE) certain duties and responsibilities. Therefore (KHIE) can't be dissolved without changing that statute," Ellis said.
The earliest the law could be changed is January, when the Legislature convenes and could first consider the proposed changes.
The proposal under consideration would dissolve KHIE by August.
Another concern board members expressed about the KDHE plan was whether the privacy and security of patient information would be safeguarded as well by a state agency.
"My major concern is that for seven years we saw the value in a public-private partnership, and now all of a sudden we don't," said board member Helen Connors, who represents the University of Kansas Medical Center. "Where did that go by the wayside?"
The idea of a public-private organization to oversee the transition from paper to digital patient records has been around since at least 2005.
Then, in 2007, Gov. Kathleen Sebelius, a Democrat who later left the state to become U.S. Secretary of Health and Human Services, established the Kansas Health Information Exchange (HIE) Commission, which identified creating a public-private regulatory body as a "top priority."
"The consensus was that the leadership and services of a state-wide HIE needed to be viewed as having the ability to act independently, yet not totally disconnected from state government," the commission concluded in its report.
Based on the commission's recommendation, the executive order that established KHIE required a 17-member leadership board including representatives of the state, hospitals, doctors, health departments, employers, insurers and patients.
If the KHIE board were to vote Wednesday on KDHE's proposal, as few as five people could decide the question.
Of the 17-member board, two members do not vote and five of the 15 voting seats are vacant. The vacancies include two seats representing patients, and one each for employers, the Kansas Hospital Association and the Medicaid program.
Board member Cindy Chrisman-Smith said she was scheduled for back surgery and would not attend the meeting.
That would leave only nine members to vote, assuming no other absences or recusals. Board member Jerry Slaughter, executive director of the Kansas Medical Society and the chair of the Kansas Health Information Network, could choose to abstain, citing potential conflicts of interest. The medical society and the network are opposed to funding KHIE through fees charged to doctors and other medical providers.
In the two years since it was formed, the KHIE board has approved 10 policies considered necessary to ensure patient privacy and network security.
Board member Jerry Slaughter, who was among the early supporters of a public-private governing body, said that with those policies in place adequate groundwork had been done for KHIE’s duties to be transferred to state officials.
"In the world of politics, there's always uncertainty and there's always change. The difference is, we've got a board that's been in place for two years now that has developed all these policies," Slaughter said. "Whenever you're building an enterprise like this, the most critical time is the beginning. Once you get the policies established, once you get an operational culture firmly established, then it's easier — I'm not saying it's easy, but it's easier — to maintain that.
The regulatory board still hasn’t written a policy for how information collected through the network can be used in aggregate once it is gathered — sometimes referred to as "secondary data use."
After Kansans’ health records are digitized and fed into the network, there is expected to be a veritable treasure trove of data available to whatever entity controls the network. That information could be useful to policymakers, insurance companies, researchers and others.
But so far, there are no rules developed for who would have access to the data or for what purposes.
KHIE Chief Executive Bill Wallace told KHI News Service that has been a top concern of the board and other Kansans involved in the process dating back to the Health Care Cost Containment Commission in 2005, on which he represented insurer Blue Cross and Blue Shield of Kansas.
"All the questions surrounding secondary data use, every one of them, are very thorny questions that — to the best of our knowledge — nobody in the country has really stepped up and fully solved," he said.
Once the majority of Kansans’ health records are available on the network or exchange, significant technical hurdles would remain before the data could be aggregated and mined.
And then there are the policy questions about how the data may be used, which the regulatory body — whatever it might be at the time — must decide.
"Can it be used for commercial purposes and, if so, to what extent does patient consent to have their records exchanged also extend to the question of having their records analyzed for commercial purposes?” Wallace said.
The consensus among the state’s various HIE groups since 2005 has been that such decisions shouldn't be exposed to political influence, he said, which partly is why there was early preference for leaving those decisions with a public-private entity rather than with a state agency headed by political appointees.
"The original reason (for KHIE) was to ensure that HIE governance is independent and at arm's length from the entities it regulates and is independent and at arm's length from political considerations," Wallace said.
The discussion planned for Wednesday is intended to help board members weigh the relative benefits and costs of KHIE independence, he said.
"The cost-benefit analysis is going to have to put the costs on one side and the question of what is the best role of governance over this evolving nascent utility within the state on the other side and balance those issues," Wallace said.
Aaron Dunkel, deputy secretary at KDHE, said the agency would maintain or improve the transparency of the exchange process and would continue to collect feedback from those involved.
"Our main goal with the whole thing, from an operational standpoint at least, would be to maintain the stakeholder input that we've fostered over the last three years," Dunkel said. "The discussion around (policymaking) would all be in the public domain. If you use secondary data use as an example, all that discussion would be done in the public domain. The writing of the regulations, we would probably rely heavily on the advisory council," he said.
But board member Cindy Chrisman-Smith said she's skeptical how much voice stakeholders would have on an advisory council.
"I have sat on a number of advisory boards for KDHE programs and didn't really feel then that my voice was worth much," said Chrisman-Smith, who represents Kingman County Health Department.
Further, she said, continued state funding wouldn't be automatic for HIE regulation just because it was transferred to KDHE.
"I know there's been areas in which KDHE assumed responsibility and control previously, and when the money stopped the service stopped," she said, citing restaurant inspections and a local environmental protection program. "I would certainly hate for that to happen with health information exchange."
The KDHE proposal would eliminate more than half of the KHIE projected annual costs, including:
• $134,900 in salaries and benefits;
• $49,300 for insurance, office space and other overhead; and
• $44,800 or more in legal and other consulting services.
The projected cost for transferring KHIE operations to KDHE is about $75,000.
The KDHE plan calls for eliminating the chief executive position, which was created in October with the hiring of Wallace. The other two KHIE staff members would be offered positions at KDHE.
A third option for the board could be a hybrid approach, said Slaughter, in which the administrative function of KHIE is transferred to KDHE and the board retains, for example, the authority to write policy or license the private networks, sometimes called HIOs.
"Maybe there's a way to get the economies that would derive from KDHE's resources to help do the work, but having maybe a stronger role for the board," Slaughter said. "That ought to be evaluated as well."
So far, KHIE operations have been funded by a $9 million federal grant administered by the federal Office of the National Coordinator, or ONC.
The lion's share of the remaining $5.5 million has been earmarked for setting up the technical infrastructure for the statewide exchange. The KHIE board has approved a plan to distribute the funds to the two KHIE-sanctioned networks — KHIN and LACIE — which are implementing the infrastructure.
But ONC funds remain for exchange regulation through September 2013, when the grant expires.
Regardless of what the board decides on KHIE's future, KDHE's Dunkel — who administers the ONC grant for the state — told KHI News Service that costs of regulating the exchange would be paid for by the grant while funds were available.
However, he said, "We'd save $150,000 in year one and then $400,000 a year moving forward that doesn't get charged back to the HIOs. If that's the world we're going to live in post-grant, and we know that now, the concept of maintaining the board just because we have grant funding doesn't make a whole lot of sense to me."
KHIE chief executive Wallace likened the decision before the board to a "Gordian knot," entangled with significant questions of law, cost, timing and whether the privacy and security of patient health information warrants independent regulation.
"It would seem we have adequate time to carry forward as we are and fully debate the best way to handle HIE governance going forward," Wallace said. "I don't think we're going to fall off the flat earth if we don't make this decision on Aug. 8."
→ Kansas breaks ground on statewide digital health network (5/28/12)
→ The pros and cons of health information exchange: An interview with Dr. Joe Davison (5/28/12)
→ Patient health exchange networks agree to connect (11/12/13)
→ The Kansas insurance marketplace that might have been (10/21/13)
→ Security and privacy of patient data subject of regulatory hearing (9/30/13)
→ Deadline looming for state's patient record exchange (8/26/13)
→ KDHE begins day-to-day duties of HIE regulation (7/19/13)
→ Network execs squabble over issue of exchange connectivity (5/23/13)
→ KU Hospital, Shawnee Mission going live on statewide health record exchange (5/9/13)
→ Governor signs HIE bill transferring regulatory authority from KHIE to KDHE (4/18/13)
→ This is why health IT systems aren't keeping up (3/19/13)
→ Senate panel hears bill to move HIE regulatory authority to KDHE (3/13/13)
→ Bill introduced to transfer regulatory authority from KHIE to KDHE (2/12/13)
→ Legislators request 'lengthy discussion' on HIE developments (1/16/13)
→ KHIE board members get cold feet on legal changes (12/13/12)
→ KHIE defers details of transition to KDHE (10/10/12)
→ KHIE board turns over regulatory duties to state (9/12/12)
→ HIE board delays decision on turning authority, costs over to state (8/8/12)
→ Regulators of health information exchange to consider ceding authority to state (8/6/12)
→ The cost of independent regulation of health information exchange (8/6/12)
→ KHIE board presented with proposal to dissolve the organization by August (7/11/12)
→ Far fewer than projected patients opting out of health information exchange (6/14/12)
→ Public awareness campaign begins for health information network (5/23/12)
→ Networks granted temporary licenses to exchange patient data (4/11/12)
→ KHIE committee changes course on funding scheme (3/26/12)
→ Rural Kansas doc featured as national technology leader (8/17/11)
→ State Medicaid officials announce new schedule for digital health records exchange (7/25/11)
→ Kansas health care providers get first look at exchange implementation (2/4/11)
→ Full coverage of health information technology in Kansas
The KHI News Service is an editorially independent initiative of the Kansas Health Institute. It is supported in part by a variety of underwriters. The News Service is committed to timely, objective and in-depth coverage of health issues and the policy making environment. All news service stories and photos may be republished at no cost with proper attribution, including a link back to KHI.org when a story is reposted online. More about the News Service at khi.org/newsservice or contact us at (785) 233-5443.