Avert Liability Risk for EHR Donations


September-October 2013 - Vol. 2 No. 5 - Page #2

The Department of Health and Human Services’ (HHS) Office of Inspector General (OIG), and the Center for Medicare and Medicaid Services (CMS) issued a safe harbor in their final rule under the federal anti-kickback law, and an exception to the Stark self-referral law that permits certain donations of electronic health records (EHR) software or information technology and training services from one facility to another in August of 2006. The OIG’s and CMS’ stated purpose for the new safe harbor and exception was to lower perceived barriers to the adoption of health information technology by promoting the adoption of open, interconnected, interoperable electronic health record systems.1 The safe harbor and exception are both currently set to terminate on December 31, 2013, and while CMS and OIG have proposed extending the safe harbor and exception, both are considering excluding donations by laboratories from any such extension. It is important to note that any donation of EHR software by an independent laboratory, a hospital laboratory, or a pathology practice to a referral source must be made in compliance with the safe harbor and, if a donation is made to a physician practice, with the exception.



Donation Overview
Under the EHR safe harbor and exception final rule, laboratories and other permitted donors can subsidize the cost of compliant EHR technology to independent physicians or groups at 85% of the cost of such technology. Assuming other safe harbor and exception conditions are met, there are specific requirements set forth under this exception that must be acknowledged and integrated into any facility that offers the donation of EHR software. These requirements cover permitted donors and recipients, covered technology and its attendant mandates, the value of donated technology, and any written agreements necessary to the relationship. Accordingly, these requirements have nuanced factors that laboratory managers and directors should be aware of.

Permitted Donors and Recipients
Viewing the EHR donation relationship from the donor’s perspective, the OIG has informally acknowledged concern about the potential for abuse by ancillary service providers and suppliers, including laboratories. According to the OIG, it is alert to patterns of increased utilization correlated with transfers of nonmonetary remuneration in the form of EHR technology. The OIG also noted that, notwithstanding the safe harbor and exception, parties remain liable under various federal and state laws for billing abuses, including over-billing and billing for items and services that are not medically necessary.

As for the technology recipients, the final rule permits donors to use selective criteria for choosing recipients, provided that neither the eligibility of the recipient, nor the amount or nature of the items or services is determined in a manner that directly takes into account the volume or value of referrals or other business generated between the parties. A donation that falls within one of the selection categories set forth below is deemed not to directly take into account the volume or value of referrals or other business generated between the parties, absent evidence to the contrary. The selection categories are as follows:

  1. The determination is based on the total number of prescriptions written by the recipient (but not the volume or value of prescriptions dispensed or paid by the donor or billed to a federal health care program);
  2. The determination is based on the size of the recipient’s medical practice (for example, total patients, total patient encounters, or total relative value units);
  3. The determination is based on the total number of hours that the recipient practices medicine;
  4. The determination is based on the recipient’s overall use of automated technology in his or her medical practice (without specific reference to the use of technology in connection with referrals made to the donor);
  5. The determination is based on whether the recipient is a member of the donor’s medical staff, if the donor has a formal medical staff;
  6. The determination is based on the level of uncompensated care provided by the recipient; or
  7. The determination is made in any reasonable and verifiable manner that does not directly take into account the volume or value of referrals or other business generated between the parties.

Covered Technology
Under the final rule, the term electronic health record is broadly defined as a repository of consumer health status information in computer processable form used for clinical diagnosis and treatment of a broad array of clinical conditions.1 Therefore, when addressing the inclusion of software/IT and training services, only nonmonetary remuneration that consists of items and services in the form of software or IT and training services that are necessary and used predominantly to create, maintain, transmit, or receive EHRs are protected under the rule [see SIDEBAR]. 

Hardware (eg, routers or modems) is not covered, nor is the hardware’s operating software. Other non-covered items include storage devices, software with core functionality other than EHR (eg, human resources or payroll software, or other software focused primarily on practice management or billing), or items or services used by the recipient primarily to conduct personal business or business unrelated to the recipient’s clinical practice or clinical operations. The provision of staff to recipients or their offices also is not covered.

Donation Requirements
Further to the rule that governs the types of technology that are covered, as well as the breadth of that coverage, there are additional requirements that define other aspects of the final rule, such as necessity, predominance, interoperability, and electronic prescribing. These sections are broken down as follows:

  • Necessary Requirement: Software and services are not deemed necessary if the recipient already possesses equivalent software or services. Under the rule, if a donor knows that the recipient already possesses equivalent items or services, or acts in deliberate ignorance or reckless disregard of that fact, the donor will not be protected by the safe harbor and exception. Accordingly, prudent donors should make reasonable inquiries to recipients about the scope of their technology and document these communications. The rule does not preclude upgrades of items or services that enhance their functionality (eg, a software upgrade).
  • Predominance Requirement: EHR functions must be predominant. The core functionality of the donated technology must be the creation, maintenance, transmission, or receipt of individual patient’s EHRs.  Keep in mind, the safe harbor and exception do protect arrangements involving software packages that include other functionality related to the care and treatment of patients (eg, patient administration, scheduling functions, billing and clinical support).
  • Interoperability Requirement: The donated EHR software must be rendered interoperable at the time it is provided to the recipient. This means that, at the time of the donation, the software is able to communicate and exchange data accurately, effectively, securely, and consistently with different information technology systems, software applications, and networks, in various settings; and, is able to exchange data such that the clinical or operational purpose and meaning of the data are preserved and unaltered. The donor (or any person on the donor’s behalf) cannot take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or EHR systems. 
  • Interoperability must apply in various settings, meaning that the software must be capable of being interoperable with respect to systems, applications, and networks that are both internal and external to the donor’s or recipient’s systems, applications, and networks. Software is not interoperable if it can only communicate or exchange data within a limited health care system or community. Interoperability is to be evaluated given the prevailing state of technology at the time the items or services are provided to the recipient. 
  • Parties must have a reasonable basis for determining that software is interoperable. Thus, standards and criteria related to interoperability that are recognized by HHS should be consulted. Compliance with these standards will provide greater certainty to donors and recipients that products meet the interoperability requirement and may be relevant in any enforcement activities. To avoid uncertainty, parties can avail themselves of the deeming provision. This provides that software is deemed to be interoperable if a certifying body recognized by HHS has certified the software within 12 months prior to the date it is provided to the recipient.
  • Electronic Prescribing Requirements: The EHR software must contain electronic prescribing capability, either through an electronic prescribing component or the ability to interface with the recipient’s existing electronic prescribing system that meets the applicable standards under Medicare Part D at the time the items and services are provided. 

For items or services that are of the type that can be used for any patient without regard to payor status, the donor cannot restrict, or take any action to limit the recipient’s right or ability to use the items or services for any patient.

Value of Technology
The final rule offers protection only if the recipient pays 15% of the donor’s cost of the overall technology for which the donation is made (as well as 100% of the cost of non-eligible items, such as hardware). This payment is required to be made before the recipient receives the items and services being donated. All donated software and health information technology and training services are subject to this cost-sharing requirement. Any updates, upgrades, or modifications to the donated EHR system that are not covered under the initial purchase price for the donated technology are subject to separate cost-sharing obligations by the recipient (to the extent that the donor incurs additional costs). Donors (and their affiliated individuals and entities) are prohibited from providing financing or making loans to recipients to fund the recipient’s payment for the technology. Under the final rule, there is no cap on the amount of protected technology that can be donated.

Written Agreement Required
When an EHR donor/recipient agreement is ultimately established, the donation should be documented in a written agreement that sets forth the following: It must be signed by all applicable parties; it must specify the items and services being provided, the donor’s cost of those items and services, and the amount of the recipient’s contribution; and it must cover all of the EHR items and services to be provided by the donor (or any affiliate). This requirement will be met if all separate agreements between the donor (and affiliated parties) and the recipient incorporate each other by reference or if they cross-reference a master list of agreements that is maintained and updated centrally and is available for review by the secretary of HHS upon request. The master list should be maintained in a manner that preserves the historical record of agreements.

Conclusion
As of the date of the preparation of this article, it is uncertain whether the OIG and CMS will extend the safe harbor and exception for donations of EHR software and, if the safe harbor and exception are extended, whether they will extend to donations by laboratories. If the safe harbor and exception are not extended (at least not for laboratories), then no laboratory would be permitted to make any contribution to a referral source towards the referral source’s EHR. The OIG has separately blessed limited contributions of interfaces that are limited solely to the transmission of laboratory orders and results between the laboratory and its clients, and such interface arrangements are expected to continue to be permissible.

Reference

  1. Medicare Program; Physicians’ Referrals to Health Care Entities With Which They Have Financial Relationships; Exceptions for Certain Electronic Prescribing and Electronic Health Records Arrangements; Final Rule. 42 CFR Part 411. Vol. 71, No. 152. August 8, 2006.

 


Jane Pine Wood, JD, is an attorney with McDonald Hopkins LLC, based in Dennis, Massachusetts. She specializes in corporate, regulatory, reimbursement, and contractual matters in the representation of physicians, clinical and anatomic laboratories, hospitals, and other health care providers. Jane received her JD from Vanderbilt University and is a member of the Massachusetts Bar Association, the Ohio Bar Association, and the American Health Lawyers Association.

 

 

 


SIDEBAR
Donation of EHR: What is Included?
Upon the donation of EHR services to a qualified receiver, covered items and services include: 

 

 

  • Interface and translation software
  • Rights, licenses, and intellectual property related to EHR software
  • Connectivity services, including broadband and wireless internet services (including connectivity fees)
  • Clinical support and information services related to patient care (but not separate research or marketing support services)
  • Maintenance services
  • Secure messaging (ie, permitting physicians to communicate with patients through electronic messaging) 
  • Training and support services (such as access to help desk services)

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