Revocation Of EHR Certification Rocks Industry

by Pepper Hamilton LLP

The news from the Office of the National Coordinator for Health IT (ONC) about the revocation of the electronic health record (EHR) certifications of two EHR products that had previously been certified will have tremendous ramifications not only on the EHR vendor losing its certifications, but generally on providers and vendors as well.

According to the ONC press release of April 25, 2013, ONC indicated that the two EHR products “do not meet [requisite] standards and providers cannot use those products to meet the requirements of the Medicare and Medicaid EHR Incentive Programs.” The two EHR products developed by a company based in Santa Fe Springs, California, were retested for certification by InfoGard Laboratories, one of the ONC’s authorized certification bodies (ACBs) and allegedly failed such testing. There had apparently been complaints made to ONC about the products in question and ONC investigated. Obviously, in light of the loss of certification for these two EHR products, there are questions and issues that arise for the providers using those products (even though they may have filed the complaints leading to de-certification); health care providers generally; and EHR vendors.

Some questions that come immediately to mind for providers impacted by the loss of certification are:

  • What will happen to the meaningful use payments already received based upon the previously issued certification? Do providers now have an obligation to repay HHS voluntarily or should they await further contact by HHS or ONC?
  • What legal rights arise under the contracts for delivery of the now de-certified EHR systems when delivery was predicated on receiving a certified EHR product?
  • If the previously certified EHR product has not yet been delivered under the contract, does the provider have a right to refuse delivery of the now de-certified system since certification was a condition to delivery and acceptance? Careful review of the contract terms, negotiated warranties and ability to replace the system with a certified product will require careful review by legal counsel.
  • How will the lack of a certified system, such as for communications with a pharmacy electronically, impact on a provider’s Medicare rates and the imposition of penalties?

Many other questions arise for providers generally about the de-certification of a previously certified system:

  • Does the provider need to continually monitor the ONC certification process after contracts have been executed to ensure that the EHR vendor continues to be certified by the ONC?
  • Should providers now place a financial reserve from the receipt of meaningful use payments due to the possibility of a de-certification of the system purchased and installed?
  • Providers will need to negotiate contracts that contain stronger warranties, indemnities and penalties for post-contractual loss of certification and the past and future receipt of meaningful use payments.
  • Providers will want to place affirmative duties on vendors who are representing EHR certification to provide notice to providers of investigations into the certification of the EHR being purchased.
  • Will the de-certification process drive larger providers to higher-end vendors, thus putting smaller providers at further economic risk if they utilize smaller, innovative vendors to fulfill their needs?
  • How will a provider’s compliance department view this de-certification action, and how will compliance officers establish a mechanism to ensure meaningful use payments have been properly received?

Vendors will certainly have concerns about the ONC de-certification process and its dampening impact on their EHR products and reputation. For example:

  • What are the appeal rights resulting from an ONC de-certification process and are they procedurally protective of the huge investments already made by EHR developers and developer reputation in light of the public announcement of de-certification?
  • Will these de-certification actions impact disproportionately on small vendors and stifle innovation in the EHR field?
  • Provider-customers will demand more certification assurances and guarantees, potentially driving a higher risk assessment and higher prices.
  • Vendors should pay more attention to customer complaints earlier in the process as many providers are counting on receipt of meaningful use payments as overall reimbursement payments are diminished and expenses are escalating generally.

If you have questions about the ONC action or any of the issues raised in this Alert, contact your health care attorney at Pepper Hamilton LLP.

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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