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