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Regulatory Compliance

June 25, 2010
by Daniel F. Gottlieb, McDermott Will & Emery LLP
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The Regulatory Framework for Qualifying EHR Donations

Executive Summary

A healthcare organization considering the roll-out of EHR technology to physicians or other referral sources should prepare a careful plan to assure that the expectations of CMS and/or the OIG are met. In particular, donation recipient selection criteria and the proper allocation of EHR technology acquisition expenses can be complex and fact-specific and prevent one size fits all approaches.

Following the issuance of proposed regulations for the Medicare and Medicaid incentives for the meaningful use of certified electronic health record (EHR) technology earlier this year, hospitals and other providers have received new and renewed requests from physicians and other referral sources to subsidize their transition or upgrade to certified EHR technology. Particularly in this context, CIOs and other decision-makers within hospital-based organizations need to make sure that any plan for rolling out EHR technology to referral sources is consistent with federal and state fraud and abuse laws.

For hospitals and other providers of Stark-designated health services (DHS) to provide the assistance to physicians or physician organizations who refer Medicare patients to the provider, the assistance, in most cases, must be structured to comply with the Stark Law exception for the donation of EHRs. Likewise, EHR donations to referral sources for Medicare or other federal health care program patients must be structured to comply with the federal Anti-Kickback Statute. To facilitate compliance with both laws, the Office of Inspector General (OIG) of the Department of Health and Human Services (HHS) adopted an EHR-donation safe harbor to the Anti-Kickback Statute that is substantially the same as the Stark Law EHR donation exception adopted by the federal Centers for Medicare and Medicaid Services (CMS).

Stark Anti-Kickback Statute requirements

The Stark EHR donation exception and Anti-Kickback Statute EHR donation safe harbor identify parties (donors) that may donate EHR software, information technology and training services, to physicians and other referral sources for items and services reimbursed by federal health care programs. The Stark exception requires an EHR technology donation by a DHS provider to a referring physician to meet the following standards:

  • The donation must be in the form of software or information technology and training and support services necessary and used predominantly to create, maintain, transmit, or receive EHRs (Covered Technology). A donor may not donate hardware (such as routers, modems, storage devices and software that makes the hardware function), staffing (e.g., to migrate data), and items and services to conduct personal business or business unrelated to the physician's medical practice.

  • The EHR software must have an e-prescribing component that meets Medicare Part D standards at the time of donation.

  • The recipient cannot already have items and services equivalent to those provided by the donor.

  • Donated software must be interoperable with other EHR technology at the time it is provided and the donor cannot restrict interoperability. Software is deemed interoperable if certified as interoperable by a certifying body recognized by the Secretary of HHS no more than 12 months prior to the date of the donation to the physician. The Secretary has designated the Certification Commission for Health Information Technology (CCHIT) as the certifying body for this purpose. Note that this certification is not the same as the EHR technology certification required for purposes of demonstrating meaningful use of certified EHR technology under the Medicare and Medicaid EHR incentive programs.

  • The EHR donation recipient must pay 15 percent of the total cost for the donated Covered Technology before receiving the donation. If a donor purchases hardware or other items and services from a vendor that are not Covered Technology, the recipient must reimburse the donor for 100 percent of the cost of the non-Covered Technology. Accordingly, when a donor purchases or licenses both Covered Technology and non-Covered Technology from a vendor, it should create an itemized list of EHR technology assets to be donated and specify whether the donor will subsidize up to 85 percent of the cost of each item of Covered Technology and allocate 100 percent of the cost of non-Covered Technology to the recipient.

  • Neither the physician nor the physician's practice (including employees and staff members) may make the receipt of items or services, or the amount or nature of the items or services, a condition of doing business with the donor.

    Daniel f. gottlieb
    Daniel F. Gottlieb
  • The donor cannot limit the physician's right to use the donated EHR technology with any patient when the technology can be used for any patient without regard to payer status.

  • The donor cannot directly take the volume or value of referrals or other business between the parties into account when determining a physician's eligibility or the amount or nature of a donation. Permissible criteria for selecting donation recipients under this requirement are discussed below.

  • The donation must be documented in a signed agreement that specifies the items and services to be provided and the donor's cost.

  • The transfers must be completed and all conditions satisfied by December 31, 2013.

The Anti-Kickback Statute safe harbor is essentially identical to the Stark Law exception aside from the fact that the safe harbor addresses donations to referral sources other than physicians and physician organizations.