HITECH Act 'lit a fire' under health systems

The nation's employers can expect a 9 percent jump in medical costs in 2011, according to a new report from PricewaterhouseCoopers, which details the reasons for the anticipated hike and highlights the possibility for savings over the long term – including the increasing use of electronic health records.

"Health reform delivers only a minor impact on the underlying medical cost trends in 2011 and introduces hundreds of changes in the healthcare system designed to reduce costs and improve efficiencies in the long-term," said Kelly A. Barnes, U.S. health industries leader at PricewaterhouseCoopers. "These changes could bring significant new cost savings opportunities for employers and payers as well as new choices and transparency for workers buying insurance."

The annual "Behind the Numbers," which was released Tuesday, includes findings of PwC's Health and Well-Being Touchstone Survey of more than 700 employers from 30 industries, as well as interviews with health plan actuaries and other executives whose companies provide health insurance for 47 million American workers and their families. The survey was completed in the first quarter of 2010. Companies ranged in size from small employers with fewer than 500 employees to large companies with more than 20,000 employees.

Electronic health record adoption and other information technology uptake is expected to be at its highest in 2010 and 2011, driven by federal stimulus funding in the HITECH Act, as both hospitals and physicians aim to prove meaningful use of the technology in order to quality for the bonuses and avoid penalties.

"The mandates of the HITECH Act, passed in 2009, lit a fire under health systems because of the potential bonuses and future penalties for not complying with the new regulations," the report asserts.

Nearly 70 percent of CIOs surveyed earlier this year by PwC and the College of Healthcare Information Management Executives – CHIME – said the new regulations accelerated health IT efforts they were going to invest in anyway.

When asked when their systems would incur most of the cost for implementing EHRs and other mandates, 34 percent said in 2010 and 47 percent said 2011.

PwC's report predicts that the majority of the American workforce will have a health insurance deductible of $400 or more, as more employers return to "indemnity style" cost-sharing by raising out-of-pocket limits, replacing co-pays with co-insurance and adding high-deductible plans.

Improving wellness programs and increased cost-sharing lead the planned changes employers will make in the benefit plan designs they will offer for next year.

PwC research also shows:

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