New Rules Amend Regulatory Exceptions For Donation Of Electronic Health Records Items And Services

On December 27, 2013, the Department of Health and Human Services published two final rules, one amending the Office of Inspector General’s (OIG) Anti-Kickback safe harbor related to electronic health records (EHR) items and services (42 C.F.R. § 1001.952(y)), and the other amending the Centers for Medicare & Medicaid Services’ (CMS) parallel Stark law exception (42 C.F.R. § 411.357(w)).  See 78 Fed. Reg. 79202, 79202-79220 (Dec. 27, 2013) (OIG Final Rule); 78 Fed. Reg. 78751, 78751-78769 (Dec. 27, 2013) (CMS Final Rule).  OIG and CMS first promulgated these two provisions in 2006 to incentivize the adoption of EHR technology.  Essentially, the Anti-Kickback safe harbor and the Stark law exception permit certain entities (e.g., hospitals) to subsidize up to 85% of the cost of EHR items or services for physicians or other eligible recipients, provided certain regulatory criteria are met.

The two final rules published last week are nearly identical and make five changes to the EHR provisions.  First, the list of protected donors will now exclude laboratory companies.   Second, OIG and CMS extend the regulatory protections for EHR donations to December 31, 2021.  Third, the agencies redefine when EHR software is deemed interoperable.  Fourth, as modified, neither provision will require EHR software to include e-prescribing capability.  Fifth, the agencies clarify the requirement prohibiting a donor from taking any action that limits or restricts the use, compatibility, or interoperability of the donated EHR. 

Protected Donors to Exclude Laboratory Companies

OIG and CMS modified the scope of protected donors to exclude laboratory companies.  Interestingly, pathology practices and laboratory companies advocated for this change, citing concerns about abusive practices in the vendor and physician communities.  For example, in comments to CMS, the College of American Pathologists reported that EHR vendors have encouraged physician practices to contact a pathology practice/laboratory and ask it to subsidize 85% of the cost of an EHR system.  The physician practice may maintain that another laboratory has already offered to pay for the EHR software and that the physician practice will redirect its referrals if this pathology practice/laboratory does not meet or exceed the offer.  In addition, OIG and CMS noted that several states have prohibited or limited the ability of laboratories to donate EHR software to physicians. 

Protection Extended to December 31, 2021

OIG and CMS initially included a sunset date of December 31, 2013 in the EHR provisions because it was thought that the need for regulatory protection would diminish dramatically over time as the software became an integral and standard part of medical practice.  Although the agencies recognized great progress in the integration of EHR technology since 2006, each explained in its respective final rule that “[c]ontinued use and further adoption of electronic health records technology remains an important goal of the Department.”  In response to public comments, both OIG and CMS extended the sunset date beyond the date contemplated in the proposed rules (December 31, 2016) to December 31, 2021.  In so doing, each rejected requests to make the EHR protections permanent.    


Both the Anti-Kickback safe harbor and the Stark law exception require that EHR software be “interoperable” at the time it is donated.  Software is now deemed interoperable “if, on the date it is provided to the [physician or other] 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.”  This modification is intended to ensure that all software is as interoperable as feasible given the state of technology when the donation is made and that donors and recipients will have increased certainty regarding whether the donated software meets the interoperability requirement.

E-Prescribing Capability

The new rules eliminate the requirement that donated EHR software have e-prescribing capability.  OIG and CMS explained that there are now other policy factors sufficiently driving the adoption of e-prescribing capability.

Prohibition on Action That Restricts or Limits the Use of EHR Software

Under the new rules, the agencies confirm that neither a donor nor a person acting on the donor’s behalf can take any action that limits or restricts the use, compatibility, or interoperability of the donated EHR software.  See 42 C.F.R. § 411.357(w)(3); 42 C.F.R. § 1001.952(y)(3).  This requirement is intended to promote the donation and use of EHR technology that is compatible and able to communicate with software from other vendors.  OIG and CMS requested comments regarding whether this provision should be modified in order to reduce the occurrence of data and referral lock-in.  The agencies did not substantively modify this requirement in the final rules but did clarify that any action to limit the use of donated EHR by, for example, charging fees to prevent nonrecipient providers and/or the donor’s competitors from interfacing with the software would pose legitimate fraud and abuse concerns.

With the exception of the sunset provision, these changes will take effect on March 27, 2014.  The provisions extending the EHR protections to December 31, 2021 took effect on December 31, 2013.

Topics:  CMS, Cybersecurity, Data Protection, EHR, Healthcare, Medicaid, Medicare, PHI, Stark Law

Published In: Health Updates, Privacy Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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