by Margaret Young Levi and Roz Cordini

Amidst concerns that physicians and other providers are slow to adopt electronic health record (EHR) systems and be “meaningful users” of health information technology, just before the New Year, the federal government extended two programs that permit hospitals and other health care providers as well as health plans to subsidize physician offices’ adoption of EHRs without violating the Anti-Kickback Statute and Stark Law prohibition on inducements for referrals of federal health care program business.  These programs were not simply extended though.  This article addresses certain modifications to the programs of which providers should be aware.

In 2006, both the Department for Health & Human Services’ Office of Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS) implemented regulations permitting hospitals and other providers to donate EHR items and services (such as EHR software and training) to other health care providers. CMS created an exception to the Stark Law, allowing an entity to provide a physician with non-monetary remuneration in the form of software used predominantly to create, maintain, transmit, or receive EHRs and associated services. The OIG established a similar safe harbor under the Anti-Kickback Statute.

Both the Stark Law exception and the Anti-Kickback Statute safe harbor were scheduled to sunset on December 31, 2013, but on Friday, December 27, 2013, two final rules were published in the Federal Register extending and modifying these programs. CMS’s Final Rule amending and extending the EHR exception to the Stark Law may be viewed in full here.   The OIG extended and amended its EHR safe harbor protecting EHR donations under the Anti-Kickback Statute, and that Final Rule is available here.  Both Final Rules are very similar and generally provide as follows:

1. Safe Harbor Sunset Date Extended to 2021

Because of slower than anticipated EHR adoption, this Safe Harbor sunset date has been extended until 12/31/2021 in order to encourage physicians and other health care providers to adopt EHRs.

2. Deeming Provision Revised

The Safe Harbor requires that donated software be “interoperable.” Software was previously “deemed interoperable” if a certifying body recognized by the Secretary of HHS had certified the software within 12 months of the date it was provided to the recipient. The 12-month provision has been eliminated. Now, software is deemed interoperable “if, on the date it is provided to the recipient, it has been certified by a certifying body authorized by the National Coordinator for Health Information Technology to an edition of the electronic health record certification criteria identified in the then-applicable version of 45 CFR part 170.”

3. Electronic Prescribing Capability Requirement Removed

Donated EHR software is no longer required to include e-prescribing capability (or the ability to interface with the recipient’s e-prescribing system). This change is in large part because this has become standard practice and is viewed as no longer necessary.

4. Lab Companies are No Longer Protected Donors

To reduce the likelihood that the safe harbor will be misused by donors to secure referrals, laboratory companies are no longer permitted to be donors of EHRs. Complaints of potentially abusive practices involving potential recipients conditioning referrals for laboratory services on the receipt of donations from laboratory companies lead to this change. Laboratory companies are defined broadly to include not just small, pathologist-owned labs or large national chains, but also to include hospital laboratories if they possess a supplier number separate from the hospital’s supplier number and bill for services under the non-hospital supplier number.

Other types of suppliers were also considered for exclusion (such as DME companies); however, they did not pose concerns to the level of lab companies. Therefore, only laboratory companies have been excluded under the Final Rule.

5. Prohibition Clarified Relating to Donor’s Attempts to Restrict/Limit Use of EHR Systems

A donor (or any person on the donor’s behalf) is prohibited from taking any action to limit or restrict the “use, compatibility, or interoperability” of the donated items or services with other EHRs, which is commonly called a “data lock in.” The Final Rule clarifies that the term EHR is not to be defined narrowly, however, and adds a non-exhaustive list of examples of technologies they believe to be included within the language, such as health information technology applications, products or services. The OIG strongly warns: “Donations that do not meet the conditions of the safe harbor—because they are used to lock in referrals—are suspect under the law.”