The Department of Health and Human Services (“DHHS”) Office of Inspector General (“OIG”) and the Centers for Medicare and Medicaid Services (“CMS”) recently released on August 8, 2006 final rules establishing new safe harbors and exceptions for the donation of items and services for e-prescribing and electronic health records to physicians and other providers. These safe harbors and exceptions establish certain conditions under which: (1) health care providers furnishing services that are subject to the Stark Law (e.g., hospitals) may donate to physicians (and certain other recipients) certain qualifying electronic prescribing technology that are necessary and used solely for electronic prescribing; and (2) hospitals and other providers may provide physicians and other providers who furnish services to federal healthcare program recipients with interoperable electronic health records software or information technology and training services.
The OIG specifically established a new safe harbor under the Federal anti-kickback statute for certain arrangements involving the provision of electronic prescribing technology. The OIG also established another safe harbor for certain arrangements that provides that the provision of electronic health records software or information technology and training services does not constitute nonmonetary remuneration.
CMS specifically created two new exceptions to the federal physician self-referral prohibition (the “Stark Law”). One exception applies to certain arrangements in which a physician receives compensation in the form of items or services to transmit electronic prescription information. The other exception adopted by CMS applies to certain arrangements involving the provision of nonmonetary remuneration in the form of electronic health records software or information technology and training services.
The OIG and CMS generally used the same or similar criteria for the e-prescribing safe harbor and exceptions, and for the electronic health records safe harbor and exception; however, there are some important differences. Besides the similar conditions described below, providers should keep in mind that compliance with a safe harbor under the Federal anti-kickback statute is voluntary, whereas meeting an exception to the Stark Law is mandatory. The conditions in these new safe harbors and exceptions are generally broken down into the following areas: the providers or entities (referred to as “donors”) who may donate the technology; the recipients of the donated technology and services; the selection criteria for choosing the recipients (e.g., physician groups); the technology that may be donated; and the conditions and limitations in the safe harbors and exceptions for the donation or e-prescribing items and services and EHR items and services.
For the donation of e-prescribing items and services, the new safe harbors and exceptions apply to donations of items and services provided by a hospital to a physician who is a member of the hospital’s medical staff, a group practice to a prescribing health care professional who is a member of the group practice; a Medicare Advantage organization to pharmacists and pharmacies participating in the organization’s network. In comparison, the safe harbor for electronic health records applies to donors who are an (i) individual or entity that provides services covered by a Federal health care program and submits claims for payment to the Federal health care program or (ii) health plan.
An important difference is that the new e-prescribing safe harbor and e-prescribing exception covers items and services that are necessary and used solely to transmit and receive electronic prescription information. The scope of the e-prescribing safe harbor and exception includes hardware, software, information technology and training services. In comparison, the EHR safe harbor and exception covers software and information technology and training services; however, the donation of hardware is not covered for the donation of electronic health record items and services. The software donated for an electronic health record system must also contain an e-prescribing component.
CMS limited the e-prescribing exception to the provision of items and services that are necessary and used solely to receive and transmit electronic prescription information. In regard to the necessary requirement, CMS commented items and services are not necessary if the physician already possesses equivalent items and services. CMS also commented that the used solely requirement is a safeguard against abusive arrangements in which the donated technology might constitute a payment for referrals because it might have additional value attributable to uses other than electronic prescribing. As an example, CMS noted that a computer that a physician can use to conduct office or personal business might have value to the physician apart from its electronic prescribing purpose.
In contrast to the used solely requirement for e-prescribing items and services, CMS adopted a standard that the donation of items and services for electronic health records software and technology and training services must be necessary and used predominantly to create, maintain, transmit, or receive electronic health records. The used predominately requirement means that the core functions of the software must be the creation, maintenance, transmission, or receipt of individual patients electronic health records. However, CMS also commented that protected software packages under this exception may also include other software and functionality directly related to the treatment of individual patients including for example, patient administration, scheduling functions, billing, clinical support software.
One of the conditions of the OIG’s safe harbor for the donation of electronic health records technology that has been widely discussed is the cost-sharing requirement. Recipients (e.g., physicians) are required to pay 15% of the donor’s cost of the EHR technology items and services. The donor also may not finance the recipient’s payment or loan funds to be used by the recipient to pay for the EHR items and services. However, the safe harbors and exceptions for e-prescribing and electronic health records do not include a cap on the value or the items or services donated or cost-sharing requirements for donation of e-prescribing equipment.
Some of the conditions contained in the exception to the Stark Law and the safe harbor for the donation of e-prescribing items and services include:
· The donor cannot limit or restrict use or compatibility of items or services with other e-prescribing or EHR systems.
· The donor has no actual knowledge of, and does not act in reckless disregard or deliver ignorance of, the fact that the physician possesses or has obtained items or services equivalent to those provided by the donor.
· The physician or physician’s practice cannot make receipt of items and services a condition of doing business with the donor.
· The arrangement must be set forth in a written agreement that specifies the items and services to be provided and the donor’s cost, and covers all of the items and services the donor will provide.
· For items and services that can be used for any patient regardless of payor status, the donor cannot limit or restrict the physician’s right or ability to use the items and services for any patient.
For the donation of EHR items and services, the following conditions apply in addition to the conditions listed above:
· The software must be interoperable and certified as interoperable within the 12 months prior to date of provision by a certifying body recognized by the secretary of DHHS.
· Items and services may not include staffing the physician’s office and may not be used for personal business or used unrelated to a physician’s medical practice.
· The donor cannot restrict or limit interoperable ability of the items or services with other E-prescribing or EHR systems.
· The safe harbor for the donation of EHR systems expires on December 31, 2013.