Protections to Be Extended for Electronic Health Record Donations

by Morgan Lewis
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CMS and OIG issue similar proposed rules to modify the electronic health record exception and safe harbor.

On April 10, the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General (OIG) of the Department of Health and Human Services published nearly identical proposed rules in the Federal Register to revise and extend protections for certain arrangements involving the donation of electronic health record (EHR) items and services (Proposed EHR Donation Rules).[1] The Proposed EHR Donation Rules will be open for comments until June 7. Both CMS and OIG note that their proposed rules mirror one another in an effort to "ensure as much consistency as possible between [the] proposed . . . changes, despite the differences in the respective underlying statutes." CMS and OIG also note that they will consider comments submitted to the other agency in creating their respective final rules.

EHR Exception and EHR Safe Harbor

In August 2006, CMS and OIG simultaneously published final rules establishing an exception to the federal Physician Self-Referral (Stark) Law (EHR Exception)[2] and a safe harbor to the federal Anti-Kickback Statute (AKS) (EHR Safe Harbor).[3] The EHR Exception and the EHR Safe Harbor protect certain arrangements related to the donation of interoperable EHR software technology and training services, and both are supposed to sunset on December 31, 2013. The EHR Exception and the EHR Safe Harbor established requirements addressing who could donate EHR software and training services, what items and services could be included in the donation, and other conditions necessary to comply with the EHR Exception and the EHR Safe Harbor.

Proposed Revisions to the EHR Exception and the EHR Safe Harbor

If finalized, under the Proposed EHR Donation Rules, CMS and OIG would amend certain requirements of the EHR Exception and the EHR Safe Harbor, as summarized below.

  • Extension of the Sunset Date: The sunset date would be extended to December 31, 2016. Neither CMS nor OIG favors eliminating the sunset provisions altogether, stating that the need for an exception for donations of technology should continue to diminish over time. CMS and OIG note that the December 31, 2016, date corresponds to the last year that Medicare EHR incentive payments will be available and the last year to initiate participation in the Medicaid EHR program.
  • Modification of the Interoperability Requirement: Under the current EHR Exception and EHR Safe Harbor, the donated EHR must be interoperable. EHR is "deemed" to be interoperable if it attained certification within one year prior to the date of donation. CMS and OIG propose to update this provision to reflect that the Office of the National Coordinator for Health Information Technology (ONC) is responsible for "recognizing" certifying bodies. To integrate the ONC's process for adopting certification criteria and standards, which is anticipated to occur on a two-year interval, the current 12-month time line for certification would be removed. A new provision that "more closely tracks the current ONC certification [provision]" would be substituted. Specifically, software would be eligible for deeming if, on the date of donation, "it has been certified to any edition of the electronic health record certification criteria that is identified in the then applicable definition of Certified EHR Technology."
  • Removal of E-Prescribing Capability Requirement: CMS and OIG also propose to remove the electronic prescribing capability requirement from the EHR Exception and the EHR Safe Harbor as a requirement for software and training services being eligible for donation. In light of the "meaningful use" standard promulgated under the Health Information Technology for Economic and Clinical Health Act and the progress related to electronic prescribing (e-prescribing) made by the industry, CMS and OIG note that the e-prescribing requirement is no longer necessary to achieve the goal of adopting e-prescribing capabilities for EHR records.
  • Additional Proposals and Considerations: The Proposed EHR Donation Rules include the following alternatives to amend EHR Exception and EHR Safe Harbor provisions for which CMS and OIG are seeking public comments:
    • Protected Donors: CMS and OIG propose to limit the scope of protected donors. One proposal would include only the original Medicare Modernization Act–mandated donors, i.e., hospitals, group practices, prescription drug plan sponsors, and Medicare Advantage organizations. Alternatively, CMS and OIG are considering excluding only specific types of donors but retaining the current definition of "protected donors." Potential targets for exclusion would include (i) laboratory companies, (ii) durable medical equipment suppliers, and (iii) independent home health agencies. This proposed revision was prompted, in part, by concerns that abusive donations are being made—i.e., donors are using the EHR Exception and the EHR Safe Harbor to provide referral sources with items and services that appear to support the interoperable exchange of information but which instead lead to referrals and data lock-in.
    • Data Lock-In and Exchange: CMS and OIG also note that they are considering new or modified conditions to add to the existing EHR Exception and EHR Safe Harbor that would achieve the dual goals of (i) preventing the misuse of the EHR Exception and the EHR Safe Harbor in a way that results in data and referral lock-in and (ii) encouraging the free exchange of data. For example, CMS states in its proposed rule that "it has been suggested that even when donated software meets the interoperability requirements of the rule, policies and practices sometimes affect the true ability of electronic health record technology items and services to be used to exchange information across organizational and vendor boundaries."
    • Covered Technology: CMS and OIG are seeking comments regarding the modification of the regulatory text of the EHR Exception and the EHR Safe Harbor to enumerate those items or services that fall within the scope of covered technology for purposes of the EHR Exception and the EHR Safe Harbor.

Given that there is no requirement for parties to an arrangement to comply with the requirements of an AKS safe harbor, the proposed revisions to the EHR Exception may be more relevant for those designated health entities that have or may plan to donate EHR items and services to physicians who refer Medicare beneficiaries to their institutions. This is particularly the case if the agencies finalize the proposed revision to the definition of an "eligible donor" when an entity removed from the list of protected donors has or is in the process of donating EHR items and services.


[1]. Physicians' Referrals to Health Care Entities With Which They Have Financial Relationships: Exception for Certain Electronic Health Records Arrangements, 78 Fed. Reg. 21,308 (Apr. 10, 2013) (to be codified at 42 C.F.R. pt. 411), available here; Electronic Health Records Safe Harbor Under the Anti-Kickback Statute, 78 Fed. Reg. 21,314 (Apr. 10, 2013) (to be codified at 42 C.F.R. pt. 1001), available here.

[2]. 42 C.F.R. § 411.357(w).

[3]. 42 C.F.R. § 1001.952(y).

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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