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Prepared for Members and Committees of Congress
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Lawmakers incorporated the Health Information Technology for Economic and Clinical Health
(HITECH) Act as part of the American Recovery and Reinvestment Act of 2009 (H.R. 1), the
economic stimulus bill that the President signed into law on February 17, 2009 (P.L. 111-5). The
HITECH Act is intended to promote the widespread adoption of health information technology
(HIT) to support the electronic sharing of clinical data among hospitals, physicians, and other
health care stakeholders. HIT is widely viewed as a necessary and vital component of health care
reform. It encompasses interoperable electronic health records (EHRs)—including computerized
systems to order tests and medications, and support systems to aid clinical decision making—and
the development of a national health information network to permit the secure exchange of
electronic health information among providers.
The HITECH Act builds on existing federal efforts to encourage HIT adoption and use. It codifies
the Office of the National Coordinator for Health Information Technology (ONCHIT) within the
Department of Health and Human Services. ONCHIT was created by Executive Order in 2004
and charged with developing and implementing a strategic plan to guide the nationwide
implementation of health information technology (HIT) in the public and private health care
sectors. ONCHIT has focused on developing standards necessary to achieve interoperability
among varying HIT applications; establishing criteria for certifying that HIT products meet those
standards; ensuring the privacy and security of electronic health information; and helping
facilitate the creation of prototype health information networks.
The HITECH Act provides financial incentives for HIT use among health care practitioners. It
establishes several grant programs to provide funding for investing in HIT infrastructure,
purchasing certified EHRs, training, and the dissemination of best practices. It also authorizes
grants to states for low-interest loans to help providers finance HIT. Beginning in 2011, the
legislation authorizes Medicare incentive payments to encourage doctors and hospitals to adopt
and use certified EHRs. Those incentive payments are phased out over time and replaced by
financial penalties for physicians and hospitals that are not using certified EHRs. The legislation
further authorizes a 100% federal match for payments to certain qualifying Medicaid providers
who acquire and use certified EHR technology.
Finally, the HITECH Act includes a series of privacy and security provisions that expand the
current requirements under the Health Insurance Portability and Accountability Act (HIPAA).
Among other things, the legislation strengthens enforcement of the HIPAA privacy rule and
creates a right to be notified in the event of a breach of identifiable health information.
The Congressional Budget Office (CBO) estimates that Medicare and Medicaid spending under
the HITECH Act will total $32.7 billion over the 2009-2019 period. CBO anticipates, however,
that widespread HIT adoption will reduce total spending on health care. Through 2019, CBO
estimates that the HITECH Act will save the Medicare and Medicaid programs a total of about
$12.5 billion. Under current law, CBO predicts that about 45% of hospitals and 65% of
physicians will have adopted HIT by 2019. CBO estimates that the incentive mechanisms in the
HITECH Act will boost those adoption rates to about 70% for hospitals and about 90% for
physicians.
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Introduction..................................................................................................................................... 1
Federal Efforts to Promote HIT....................................................................................................... 2
HIPAA Administrative Simplification: Electronic Transactions, Security & Privacy
Standards................................................................................................................................ 2
Electronic Transactions and Code Sets............................................................................... 3
Unique Health Identifiers.................................................................................................... 3
Health Information Security ............................................................................................... 3
Health Information Privacy................................................................................................. 4
Medicare Part D: E-Prescribing................................................................................................ 5
Anti-Kickback Statute, Stark Law............................................................................................. 6
CMS Grants, Demonstrations and Pay-for-Performance.......................................................... 6
Office of the National Coordinator for Health Information Technology .................................. 7
Agency for Healthcare Research and Quality........................................................................... 8
Other Federal Agencies............................................................................................................. 9
HIT Legislation in the 109
th
and 110
th
Congresses.......................................................................... 9
109
th
Congress........................................................................................................................... 9
110
th
Congress......................................................................................................................... 10
HITECH Act: Explanation of Provisions...................................................................................... 10
HIT Appropriations in ARRA.........................................................................................................11
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Table 1. HITECH Act: Standards Development and Adoption; Grants and Loans; Privacy
and Security................................................................................................................................ 12
Table 2. HITECH Act: Medicare and Medicaid Payments............................................................ 24
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Author Contact Information.......................................................................................................... 28
Acknowledgments......................................................................................................................... 28
Key Policy Staff ............................................................................................................................ 28
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The American Recovery and Reinvestment Act of 2009 (ARRA; H.R. 1), which the President
signed into law on February 17, 2009 (P.L. 111-5), incorporated the Health Information
Technology for Economic and Clinical Health (HITECH) Act. The HITECH Act, based on
legislation introduced in the 110
th
Congress, is intended to promote the widespread adoption of
health information technology (HIT) for the electronic sharing of clinical data among hospitals,
physicians, and other health care stakeholders.
HIT, which generally refers to the use of computer applications in medical practice, is widely
viewed as a necessary and vital component of health care reform. It encompasses interoperable
electronic health records (EHRs)—including computerized systems to order tests and
medications, and support systems to aid clinical decision making—and the development of a
national health information network to permit the secure exchange of electronic health
information among providers. The promise of HIT comes not from automating existing practices,
but rather as a tool to help overhaul the delivery of care. HIT enables providers to render care
more efficiently, for example, by eliminating the use of paper-based records and reducing the
duplication of diagnostic tests. It can also improve the quality of care by identifying harmful drug
interactions and helping physicians manage patients with multiple conditions. Moreover, the
widespread use of HIT would provide large amounts of clinical data for comparative
effectiveness research, performance measurement, and other activities aimed at improving health
care quality.
Relatively few health care providers have adopted HIT. The most recent estimate suggests that
only about 5% of physicians have a fully functional EHR that incorporates all or most of the
recommended capabilities, including electronic documentation of physicians’ notes, electronic
viewing of lab test results and radiological images, electronic prescribing, clinical decision
support, and interoperability with other systems.
1
The most important barriers to HIT adoption
include the high implementation and maintenance costs, the limited financial incentives for using
HIT, and the lack of interoperability.
2
The HITECH Act includes three sets of provisions to promote HIT adoption. First, it codifies the
Office of the National Coordinator for Health Information Technology (ONCHIT) within the
Department of Health and Human Services (HHS). Created by Executive Order in 2004,
ONCHIT was charged with developing and implementing a strategic plan to guide the nationwide
implementation of HIT in the public and private health care sectors. ONCHIT has focused its
activities in the following areas: (1) developing vocabulary, messaging, and functional standards
necessary to achieve interoperability among varying HIT applications; (2) establishing criteria for
certifying that HIT products meet those standards; (3) ensuring the privacy and security of
electronic health information; and (4) helping facilitate the creation of prototype health
information networks. The goal is to develop a national capability to exchange standards-based
health care data in a secure computer environment.
1
Catherine M. DesRoches et al., “Electronic Health Records in Ambulatory Care—A National Survey of Physicians,”
New England Journal of Medicine, 2008, vol. 359, no. 1, pp. 50-60.
2
Interoperability refers to the ability of IT systems to share and use electronic information. Sharing clinical data across
different HIT applications depends on the use of a standardized format for communicating the information
electronically.
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Second, the HITECH Act through a number of mechanisms provides financial incentives for HIT
use among health care practitioners. It establishes several grant programs to provide funding for
investing in HIT infrastructure, purchasing certified EHRs, training, and the dissemination of best
practices. It also authorizes grants to states for low-interest loans to help providers finance HIT.
Beginning in 2011, the legislation provides Medicare incentive payments to encourage doctors
and hospitals to adopt and use certified EHRs. Those incentive payments are phased out over time
and replaced by financial penalties for physicians and hospitals that are not using certified EHRs.
In addition to the Medicare incentives, the legislation authorizes a 100% federal match for
payments to certain qualifying Medicaid providers for the acquisition and use of certified EHR
technology.
Finally, the HITECH Act includes a series of privacy and security provisions that amend and
expand the current HIPAA requirements. Among other things, the legislation strengthens
enforcement of the HIPAA privacy rule and creates a right to be notified in the event of a breach
of identifiable health information.
The Congressional Budget Office (CBO) estimates that the HITECH Act payment incentives (and
penalties) will increase spending for the Medicare and Medicaid programs by a total of $32.7
billion over the 2009-2019 period. CBO anticipates, however, that widespread adoption of
interoperable EHRs will reduce total spending on health care by decreasing the number of
duplicate and inappropriate tests and procedures, reducing paperwork and administrative
overhead, and eliminating medical errors. Over the 2009-2019 period, it estimates that the
HITECH Act will save the Medicare and Medicaid programs a total of $12.5 billion. When
savings to the Federal Employees Health Benefits program and CMS’s administrative costs are
factored in, CBO estimates overall that the HITECT Act will increase direct federal spending by
$20.8 million.
3
Under current law, CBO predicts that about 45% of hospitals and 65% of
physicians will have adopted HIT by 2019. CBO estimates that the incentive mechanisms in the
HITECH Act will boost those adoption rates to about 70% for hospitals and about 90% for
physicians.
This report provides a summary and explanation of the provisions in the HITECH Act. In order to
provide some context for that discussion, the report first gives an overview of prior actions taken
by Congress and the Administrations to promote HIT, and briefly describes efforts by the 109
th
and 110
th
Congresses to enact comprehensive HIT legislation. The report will continue to be
updated to reflect administrative actions related to the implementation of the HITECH Act.
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Congress took an important first step towards promoting HIT when it enacted the Health
Insurance Portability and Accountability Act of 1996 (HIPAA; P.L. 104-191). HIPAA imposed
new federal requirements on health insurance plans offered by public and private employers,
3
The CBO cost estimate for the H.R. 1 conference agreement is at
http://www.cbo.gov/ftpdocs/99xx/doc9989/hr1conference.pdf.