What happened to the Idaho Health Data Exchange, and can other states learn from it?

This story is republished from Idaho Capital Sun. Read the original article.

Dr. Brian Crownover got a notification from the Idaho Health Data Exchange that his patient was in the emergency room. Crownover is a primary care doctor in the Boise area, but this patient was two hours away, in Twin Falls.

The patient had a complicated mental health history, so when Crownover saw the notification, he called the emergency department at the Twin Falls hospital. He wanted to answer any questions the ER team might have, but he also wanted to help coordinate the patient’s care—so that, if the hospital discharged them with a 14-day supply of a new prescription drug, Crownover could make sure the patient got in to see him by day 13.

Because of cases like that, Crownover swears by the Idaho Health Data Exchange. He uses its electronic record-sharing technology at least two or three days a week in his practice, Treasure Valley Family Medicine.

Health care providers like Crownover can pull up records from the exchange to help fill gaps in a person’s recollection of their medical history. They can see what a surgeon documented during their patient’s hysterectomy 10 years ago. Crownover said the system retains valuable data, like a patient’s sleep apnea test results—a record whose absence will tank a health insurance claim for a CPAP machine replacement, or at least force the patient to repeat the expensive test at a sleep lab.

The goal of the Idaho Health Data Exchange—like similar repositories in other states and regions—was to make every patient’s health records available at the click of a button when they needed to see a specialist, change doctors or get emergency care in another part of the state.

But the Idaho Health Data Exchange has long grappled with its funding and with a chicken-and-egg problem: how to make itself so robust that users like Crownover want to pay for it, so that it has revenue to make itself more robust.

The data exchange went into 2020 with a plan to tap a last round of money from a series of federal grants before they ran out, and in 2021 announced it would receive an $8 million philanthropic grant. But by fall 2022, the Idaho Health Data Exchange was in bankruptcy, owing creditors $4 million and defending itself against creditor lawsuits. It just exited bankruptcy after court-mediated negotiations with creditors.

An investigation by the Idaho Capital Sun has found that the exchange ran into financial troubles after its leadership made funding deals that fell through, leading to a bitter feud over a contract.

A Decade-plus of Federal Funding Comes to an End

Idaho’s is one of many health data exchanges in the U.S.—organizations that Lisa Bari, CEO of Civitas Networks for Health, thinks of “more like a public utility.”

Health care providers use an array of electronic records systems to manage their patients’ charts, and those systems don’t talk to each other. So, the exchange serves as a hub—an “independent, nonprofit, neutral convener of health information,” Bari said.

At their best, health data exchanges “create a complete, (comprehensive) record of clinical patient care: individuals’ care and also population health, at the overall level,” said Bari. “They also can start to bring in other aspects of data that are relevant—whether they’re public health data, environmental, social care.”

Exchanges got a massive boost in 2009, when Congress passed the HITECH Act that created a long-term federal funding stream.

That stream wasn’t meant to be perpetual, though. It dried up in 2021, with the expiration of the HITECH Act. Another federal funding stream became available: the SUPPORT Act that was signed into law in 2018 and made money available through 2020 for projects that could help crack down on illicit drugs and make treatments for opioid abuse more widely available.

By 2020, some exchanges had become financially sustainable. Idaho’s had not.

Bari, whose job is to support and champion health data utilities, is optimistic about their future and their potential to serve the public. And one of the data exchange’s longtime board members said he’s proud of the exchange and eager for it to move past the bankruptcy.

Every health data utility is different; some are part of a government apparatus, some are public-private partnerships, some are fully private organizations. The Idaho Health Data Exchange is currently the latter, a 501(c)(3) nonprofit.

Because it is privately owned and operated, the IHDE doesn’t have to answer directly to legislators, the governor or his directors in the Department of Health and Welfare and Department of Insurance. The data exchange gives updates to the Idaho Health Quality Planning Commission but isn’t controlled by it.

Still, the exchange was built with money from government programs, including Medicaid, and it holds millions of people’s medical records. The bankruptcy rattled members of the Idaho Legislature, and lawmakers in the 2023 legislative session ordered a look into the data exchange by the Office of Performance Evaluations.

What is the Idaho Health Data Exchange?

The exchange is not a public agency, despite having its roots in state and federal government. The Idaho Legislature passed a bill in 2006 to codify Idaho’s intent to improve health care through use of technology.

The goal of the Idaho Health Data Exchange — like similar repositories in other states and regions — was to make every patient’s health records available at the click of a button when they needed to see a specialist, change doctors or get emergency care in another part of the state.

The exchange’s medical director told the publication Healthcare Innovation in 2021 that the data exchange was taking in about 100,000 medical records per day. According to the publication, the health data exchange held medical records of more than 3 million people as of September 2021.

Health care providers large and small can pay to use the data exchange’s infrastructure to share their patients’ medical records in a streamlined portal.

Crownover pays for “bidirectional” use—meaning he can send and receive patient records.

That tier of access costs more; it’s also the tier of access that best gets to the point of a health data exchange. Only 46 other health care entities are signed up for that level of service, according to the data exchange’s provider list. Idaho’s largest health care systems—St. Luke’s and Saint Alphonsus—are there, but several of Idaho’s largest hospitals aren’t.

The regional hospitals in Idaho Falls and Pocatello aren’t signed up at all, meaning they have no access to records in the portal.

Crownover said he often uses the exchange when taking on new patients.

“Patients, I’m lucky if they can remember 50% of their medical history. Usually it’s 20%,” he said.

When he’s doing his “homework” before seeing a new patient, he said, he’ll find records in the data exchange that flag potentially serious issues: “Like, oh look, that CT scan had an abnormality, it was due to have a follow-up in 12 months, and that was three years ago. That happens all the time.”

Keeping the lights on and the health data flowing

What Crownover does not love is that, as an independent primary care doctor, he pays for the data exchange while others contribute no money and none of their own patient records.

“You’re basically asking the primary care doctors who are the lowest paid,” he said, to pay for a system that works best when it has buy-in from everyone in medicine.

Crownover believes that business model doesn’t work. He thinks government financial support “is required for something like this, because it’s something that affects the entire population—doesn’t matter if you’re red or blue, Luke’s or Al’s (health systems),” he said.

“I agree with him,” said Dick Armstrong, who has been involved with exchange since its inception, and as former director of the Idaho Department of Health and Welfare. “It should be a publicly funded utility.”

But the Idaho Legislature “has made it very clear that they’re not gonna put any money into it,” Armstrong said.

Idaho Medicaid—the health care plan for hundreds of thousands of Idahoans—isn’t “paying the full fee yet” that Idaho’s largest private health systems are paying, Armstrong said. It has been, and will be, a line item for spending in the annual Medicaid budget. Legislators balk at it, he said.

“They don’t like it; they don’t want to fund it. (They say) it takes a lot of money. Well, yeah, but this is a utility, it is something that really works,” Armstrong said.

Now that the data exchange has been approved to emerge from bankruptcy—with a plan to remain financially solvent — Armstrong thinks it has a strong future.

“We’re swinging the doors open again,” he said.

The goal is to fully fund the data exchange with user fees, and the board feels “really quite comfortable” with its finances through 2024, Armstrong said.

Most exchanges, though, rely on a variety of income streams—not just user fees—Bari said.

“The most successful, sustainable” outfits get their revenue from sources like Medicaid technology funding, grants and contracts with public agencies or private insurers, and other sources in addition to user fees, Bari said.

They can use the “big data” they’ve collected to produce reports on, for example, the most effective way to treat diabetes when patients live in remote, rural areas. That’s the kind of research health care businesses want enough to pay for.

“They’ve got multiple ways to fund themselves and keep themselves open,” in ways that benefit patients and the public, Bari said.

How the Idaho Health Data Exchange got sued

The exchange filed for Chapter 11 bankruptcy last August.

Bookkeeping records show that, as it went through that bankruptcy, the exchange paid the consulting firms of its four top executives an average of about $64,000 per month from September 2022 through March 2023.

After the Idaho Capital Sun reported its bankruptcy, the exchange issued a news release that said it “had no alternative but to seek bankruptcy protection” after a lawsuit led to the court-ordered seizure of funds it needed that money to operate, so it had no choice but to seek bankruptcy protection to stay in business, the release said.

The news release has since been removed from the website.

The origin story of that lawsuit is told in emails between Health and Welfare and Idaho Health Data Exchange officials that became public as part of the lawsuit. According to the emails and other court records:

As the end of the SUPPORT Act drew near, the exchange’s management wanted to lock down one last infusion of federal grants by the end of 2020. To do this, they made a deal with a technology vendor, Cureous Innovations: The exchange would pay Cureous for three years of services up front, before the law expired, so that it could put federal funds toward those expenses.

The deal was carried out in cooperation with the Idaho Department of Health and Welfare. Since the funding was federal, the Centers for Medicare and Medicaid Services set a few conditions; for example, the data exchange had to get a discount from Cureous for paying up front.

After that, things went sideways.

The CEO of Cureous sent emails to data exchange leadership in fall 2020, asking about “long outstanding invoices,” including $436,628 for labor. The delay was “causing a financial impact on us that I must address,” wrote CEO Shaun T. Alfreds.

Former Idaho Health Data Exchange Executive Director Hans Kastensmith responded the next day. He said that, months earlier—in spring 2020—Cureous negotiated “a special payment deal” with Health and Welfare. That deal messed with the data exchange’s usual cash flow, and it put the exchange in a bind, he said, adding that the data exchange “did not support this move but was forced, as a result of your independent negotiations with the department, to accept it …”

Kastensmith wrote that the data exchange had tried to get Health and Welfare to transmit money to pay Cureous, “but unfortunately IDHW will simply not agree.”

Alfreds said he was “surprised and taken aback” by that version of events—and added Health and Welfare officials and others to the email thread.

Andrew Masters, chief information officer for Health and Welfare, was one of the people copied on the conversation. He was “more than disappointed” to read Kastensmith’s account, he wrote.

“To be mischaracterized in this manner, when the entire DHW team has done nothing but work on IHDE’s behalf to ensure the success of this program, is unacceptable,” he wrote. Masters argued that the exchange was “involved in all aspects of these discussions” and payment delays were caused by “roadblocks thrown up by your attorneys; as directed by you.”

“In my entire career I have never worked with a vendor that has treated myself and the organization of which I am a part of in such a poor manner,” Masters wrote.

In its bankruptcy reorganization plan, the Idaho Health Data Exchange places much of the blame for its bankruptcy on the Idaho Department of Health and Welfare, suggesting it hindered the exchange’s access to federal funds to pay its subcontractors.

Health and Welfare spokesperson Greg Stahl said in an email that the exchange’s leadership’s recollections “aren’t accurate. IHDE had full access to the money appropriated by the Legislature; receipt of that funding was contingent on IHDE meeting deliverables specified in its contract with DHW.”

Health and Welfare officials declined an interview request from the Sun.

While the department didn’t say which “deliverables” the data exchange did or didn’t meet, court documents refer to concerns about security documentation.

“In late 2020, reeling from having been deprived of more than $2.2MM of funds (i.e., $1.5MM of eliminated contract value plus $700k of refused invoice payments), IHDE sought out funding support from private organizations,” the exchange’s bankruptcy reorganization plan says.

The $8 million infusion that didn’t come through

In May 2021, IHDE issued a press release about $8 million of private grant money on the way from Ethos Asset Management—a firm that later made Kastensmith an executive director. The money would come “in the form of a grant, that will continue for several years” with an option “to sustain and increase this funding in the future,” the press release said.

That didn’t happen, according to IHDE’s bankruptcy reorganization plan document.

The data exchange had been required to put up $2 million of “pledged collateral,” according to that document.

“While $2.4MM of the funds were distributed to IHDE (from Ethos), the funds were not in accordance with the required distribution schedule and were not adequate to cover the expenses IHDE was incurring to execute on the program requirements,” it says. “In early 2022 it became evident that IHDE could no longer continue to incur the expense associated with executing on the grant program requirements while not receiving promised distributions from the private organization.”

Ethos CEO Carlos Santos told the Sun in an email that his company “never had a grant funding agreement with IHDE. Ethos is not a foundation. We had a financing agreement with IHDE that could go up to 8 Million USD. … After a mutual decision to not proceed (with) the project for higher values, we decided to transform our financing to a grant of 2.4 million USD based on the socially positive external outcomes that our audit team was able to measure from the project.”

Armstrong told the Sun in a phone interview that, as far as he’d been told, Ethos bank accounts were hacked—in the process of sorting that out, Ethos determined that “some of the projects that they were going to work on, like us, just simply were put aside because they didn’t have the money they thought they originally were going to have.”

Asked if that’s what happened, Santos did not answer directly. The contracts “have strict confidentiality clauses in their terms and I do not want to disrespect any of our past or existing clients,” he wrote. “We have a good relationship with the past and present administration of IHDE.”

But, he wrote: “Banking crises and hackers are not a reason for projects to be stopped.”

Michael Ide, chair of the Idaho Health Data Exchange board of directors, declined to answer questions from the Sun about what happened in recent years leading up to the bankruptcy.

“The IHDE leadership is working with the Office of Performance Evaluations and if you’d like information, they may be your resource,” Ide wrote in a brief response to the Sun—referring to the inquiry by OPE, which undertakes evaluations at the direction of the Idaho Legislature. The OPE report won’t be publicly available for several months.

“I’m not going to possibly muddy the community knowledge of the IHDE and make sure the OPE has the right info to report to the legislature,” Ide wrote in response to the Sun.

Armstrong said the decision to remove local management and hire consultants was one of necessity.

“In all candor, we had done a pretty poor job of hiring the right executive directors—good people, but not really technically oriented to the industry,” he said. “The exchange industry is highly specialized and extremely difficult, and we thought we could do a homegrown thing, and it just didn’t work …”

The board knew it would be more expensive to hire consultants, but “we couldn’t afford not to get our technology in order,” he said.

Armstrong said that decision has “in effect, worked, in that the system—the operations side—has been very stable for a long time now.”

The company that runs those operations, Orion Health, has done so well that the data exchange doesn’t need many employees use they don’t need to do the effort, the setup, all the things that were causing us difficulty,” Armstrong said.

“I’m proud of it,” he said of the Idaho Health Data Exchange. “I’m amazed that it’s so important. It is part of the fabric of everyday life in health care.”

Editor’s note: This content was produced with support from the Doris O’Donnell Innovations in Investigative Journalism Fellowship, awarded by the Center for Media Innovation at Point Park University in Pittsburgh, Pennsylvania.