Idaho ends contract with Idaho Health Data Exchange

The Idaho Department of Health and Welfare is ending its contract to access a government-created and formerly bankrupt health data sharing service.

Idaho’s $100,000 contract to access the Idaho Health Data Exchange will end June 30. The exchange received $24.4 million through the state health department, according to a watchdog state report released last fall that found the state-created nonprofit tough to regulate.

The Idaho Department of Health and Welfare was concerned by the findings of the watchdog report related to the exchange’s management and accounting of public funds, data security and the exchange’s “compliance with applicable federal laws,” agency spokesperson AJ McWhorter told the Sun.

“The department terminated the contract due to these concerns and (the Idaho Health Data Exchange’s) lack of transparency,” he said.

Idaho’s health data exchange is among several health information systems across the country meant to help health care providers, insurers and others share patient’s medical data more effectively. The Idaho Health Data Exchange exited bankruptcy last year, with a plan to pay 25% of its debts.

Idaho Health Data Exchange Executive Director Jesse Meldru told the Sun in an email the loss of fees from the state health department “would be immaterial” to the exchange, which he said was supported by fees from other Idaho clients.

Meldru said he’s not sure he knows why Idaho ended the contract. But he said the move will cost taxpayers more for the health department’s increased labor to obtain data “through far less efficient processes.”

It “would be unfortunate to the team at (the exchange) who dedicate themselves to (the exchange’s) mission for (the Idaho Health Data Exchange’s) services to not be available to the employees of the Idaho Department of Health and Welfare as they work to execute on their mission to serve Idahoans,” Meldru said.

Why is Idaho terminating its contract?

The Idaho Health Data Exchange is a nonprofit organization propped up by almost $94 million in mostly federal tax funds. About $65 million of those funds were federal grants to medical providers to develop electronic health systems.

That’s according to a watchdog report by the Office of Performance Evaluations in November that found the exchange had few state-built accountability measures more than a decade after state officials created it.

The watchdog report didn’t find evidence that the exchange’s data is vulnerable, but identified a potential conflict of interest in a third party that attested to its security in 2021. Meldru previously said the exchange’s data security is “top notch,” citing external reviews.

The exchange has operated without state or federal grants since late 2020, Meldru previously told the Sun.

A top health official warned in April that Idaho would end the contract if the exchange didn’t release finance and security audits. Since then, the Idaho Health Data Exchange “did not provide documentation requested,” health department spokesperson McWhorter told the Sun.

The Idaho Health Data Exchange’s “response did not indicate that the organization would consider following transparency and ethical requirements described as necessary in the (watchdog) report,” he wrote. “… Misleading statements about a change in leadership at (the exchange) added to these concerns.”

Former Idaho Department of Health and Welfare interim director Dean Cameron notified Meldru on May 31 that the agency will terminate the contract.

The new full-time health department director Alex Adams, Gov. Brad Little’s former budget chief, started Wednesday.

Idaho could regulate the exchange, search for new contractor

Idaho medical providers can continue their relationships with the Idaho Health Data Exchange, deputy Medicaid administrator Sasha O’Connell told the powerful Joint Finance-Appropriations Committee on Monday.

The exchange is predominately used in rural areas as a way to reduce additional phone calls and faxes, she said. But the exchange didn’t live up to its promise, said O’Connell, who led the watchdog report into exchange as an evaluator for the Idaho Office of Performance Evaluations.

“I think that we still have a grand idea of what an exchange could look like. But the exchange did not live up to its full potential,” O’Connell said.

Idaho could pursue another health data sharing service — called a health information exchange — through a competitive bidding process, she said. And O’Connell said lawmakers could pursue reform for the exchange.

“The state does not have control at this point over the Idaho Health Data Exchange operating independently. The Legislature could pass legislation around that area, but to date they are still operating,” O’Connell told the state budget committee.

But, Meldru said in an email, if the Idaho Department of Health and Welfare chooses “ANY OTHER vendor to enable electronic patient health information exchange, it will be costing the taxpayers far more than the cost would have been to continue with” the Idaho Health Data Exchange.