On December 27, 2013, the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) and the Centers for Medicare & Medicaid Services (CMS) issued final rules revising the Stark exception (42 CFR 411.357(w)) and Anti-kickback Act safe harbor (42 CFR 1001.952(y)), which permit certain health care organizations to donate electronic health record (EHR) items and services (the 2014 Donation Rules). Besides extending the expiration date for protected donations, the 2014 Donation Rules exclude laboratory companies from protected donors, eliminate the e-prescribing requirement, and clarify covered technologies and the provisions impacting EHR interoperability.
The current Stark and Anti-kickback EHR donation rules, published in 2006 and scheduled to sunset December 31, 2013, protect various entities that subsidize up to 85% of the donor’s cost to provide recipients certain software and information technology, training, and services “necessary and used predominantly to create, maintain, transmit, or receive [EHR].” As with the 2006 rules, the CMS and the OIG harmonized the 2014 Donation Rules by considering comments on each other’s proposed rule and finalizing revisions that are almost identical, accounting for statutory differences.
Effective March 27, 2014 (except for the extension of the sunset period in 42 CFR 411.357(w)(13)), the 2014 Donation Rules make the following modifications and clarifications.
The 2014 Donation Rules finalize a December 31, 2021, expiration date (instead of the proposed December 31, 2016, expiration date) and waive the 30-day delay in effective date for this provision to protect ongoing arrangements beyond December 31, 2013. Although commenters recommended making the exception and safe harbor permanent, the CMS and the OIG believed a permanent donation regulation would be a disincentive to EHR adoption in the near term and expressed concern that inappropriate donations of EHR would “lock in” data and referrals between recipients and donors.
Donors: Who’s Out & Who’s In
As with a handful of states that have limited or banned lab companies from donating EHR technology based on fraud and abuse concerns, the agencies drew a bright line and finalized their proposal to exclude lab companies from the scope of protected donors. The agencies cite wide-ranging stakeholder comments and specific complaints about donations in return for referrals as evidence of the necessity for the lab exclusion. As a result, donations of EHR items and services from both anatomic and clinical pathology service providers must be terminated or properly restructured before March 27, 2014, to qualify for protection.
While targeted donations and quid pro quo referral arrangements do not qualify for protection in any event, the agencies believe that an outright ban on lab company donations will address concerns about such conduct in that industry segment. Protected donations from hospitals that bill labs under their Medicare provider number and lab interfaces limited to order entry and result reporting will continue to qualify for protection despite the revision.
Software: Certification, Function, and Use
Interoperability – The current EHR donation rules in §§ 411.357(w)(2) and 1001.952(y)(2) require that the donated software be “interoperable” at the time it is donated. Software is “deemed” interoperable if it has been certified by an HHS Secretary-recognized body no more than 12 months before the date it is provided to the recipient. The agencies finalized the proposed modification that links “deemed” interoperability to the Office of the National Coordinator for Health Information Technology (ONC) certification criteria. Both the CMS and the OIG concluded that since the ONC’s criteria and standards are implemented via a public process, interested parties would have more input and the process would offer more certainty to donors and recipients.
In a second revision to the “deeming provision,” the agencies eliminated the 12-month look-back requirement in favor of recognizing certification to the then-applicable version of the criteria (editions that have been adopted but not yet retired by the ONC). The agencies intend to better track the ONC certification program and assure donors that their donation meets the interoperability requirement at the time of the donation. In finalizing the “deeming” provision changes, the agencies noted that software is not required to meet the deeming provision. Software meeting the definition of “interoperable” in the regulations will still be eligible for donation even if it is not certified.
Function – The 2014 Donation Rules finalize the proposed elimination of the e-prescribing feature of donated software in §§ 411.357(w)(11) and 1001.952(y)(10). Other policies now drive e-prescribing such that its requirement is no longer necessary. The agencies confirmed, however, that e-prescribing technology will remain eligible for donation under the 2014 Donation Rules or the Stark e-prescribing exception in § 411.357(v) and the Anti-kickback safe harbor at §1001.952(x).
Use – The agencies did not change the scope of covered technology or elaborate on the test for whether the items and services are equivalent to those currently possessed by the recipient. They did, however, reiterate that the software and functionality must be necessary and used predominantly to “create, maintain, transmit or receive” EHR, including “information services related to patient care (but not separate research or marketing support services).” Donated software used for research separate and apart from patient care-related clinical support and information services is not protected, nor is software conferring an independent value on the recipient unrelated to the need for EHR. Nonetheless, the elimination of the e-prescribing feature and the confirmation that the technology itself need not be certified to be interoperable permit donors to apply the “necessary and used predominantly” test to software relating to EHR (e.g., transitions of care software).
Donor Restrictions on Use, Compatibility, or Interoperability of Donation – Any donor limitations or restrictions on the use, compatibility, or interoperability of donated EHR items and services are prohibited under current rules to safeguard against data or referral lock-in. The 2014 Donation Rules clarify the prohibition of these restrictions on donated items or services with other e-prescribing or EHR systems by providing a nonexhaustive list that includes health information technology applications, products, and services.
The 2014 Donation Rules will have a positive impact on most donation arrangements (the exception being those involving lab donors) in the following ways:
Current donation arrangements that otherwise qualify for protection may be continued beyond 2013, although the parties will need to review their donation agreement to ensure there are no gaps in the time frames established and amend the agreement as necessary.
Labs and lab donation recipients will need to terminate donation agreements or properly restructure an arrangement under existing rules before March 27, 2014.
Before proceeding further, the parties may wish to validate that the prior arrangement fully satisfied the 2006 rules and state-law restrictions, especially with respect to any explicit or implicit provisions that could be characterized as an improperly targeted, quid pro quo donation or having been donated in a manner that directly takes into account the volume or value of referrals or other business generated between the parties.
Donors (other than labs) that submit claims for items and services covered by federal health care programs may wish to evaluate the scope of technology now that the e-prescribing component has been eliminated. Donated items or services related to patient care in the form of software, information technology, and training services that are necessary and used predominantly to create, receive, maintain, or transmit EHRs can be donated provided that all other conditions are met.