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EHR and E-Prescribing: Navigating Through the CMS and OIG Exceptions and Safe Harbors

As part of its effort to modernize and streamline the health care system, the federal government has been pushing physicians and physician group practices to adopt electronic prescribing (eRX) and electronic health records (EHR).  However, many doctors find purchasing the software, hardware and equipment to support these new technologies cost prohibitive. In an effort to address this issue and stimulate the adoption of eRX and EHR, the U.S. Department of Health and Human Services Office of Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS) drafted and issued regulations creating new exceptions to the federal Stark Law and "safe harbor" regulations for the federal Anti-Kickback Statute (AKS).

CMS and the OIG released the final rules for these exceptions and "safe harbors" on August 1, 2006 with the hope of accelerating the adoption of eRX and EHR technology by physicians and other health care providers. The final rules create two new exceptions to the Stark Law and two new safe harbors under the AKS.  These are intended to provide opportunities for health care providers such as hospital systems, health networks and other large/well-funded health care providers to assist physicians and physician groups, as well as other small health care providers, with the acquisition of items and services necessary for the implementation of eRX and EHR.  While these new exceptions and safe harbors can be advantageous for physicians and physician groups, they are very technically specific, detailed and complex, and can present significant pitfalls if not properly followed. 

The eRX Rules
In general, the new Stark Law exception and the new AKS safe harbor for eRX technology require health care providers to meet multiple criteria including, but not limited to: 

• The items and services donated may consist of only the necessary hardware, software, or information technology and training services that a physician or physician group will use to receive and transmit eRX information in a drug program that meets the Medicare Part D standards.
• The items and services donated may only be provided by a hospital to the physician members of its medical staff,  by a physician group practice to its members (i.e., owners or employees), or by a prescription drug plan sponsor or Medicare Advantage organization to network pharmacists and pharmacies, as well as to prescribing professionals.
• A donor of items or services cannot restrict their use or compatibility with other eRX or EHR systems.
• The provision or receipt of items and services cannot be a condition for doing business with a donor.
• A physician or physician group practice's eligibility for receiving donated items or services cannot be based upon the volume or value of referrals the physician or physician group practice may make to a donor.
• The parties must sign a written agreement covering all of the items and services donated and disclosing the donor's cost of the items and services. 

Additionally, the new regulations permit the donation of only non-monetary remuneration, items and services.  Furthermore, if a donor fails to comply with the requirements of the eRX exception to the Stark Law or the eRX safe harbor to the AKS, the donor's lack of actual knowledge, deliberate ignorance or reckless disregard concerning a recipient's possession of equivalent items or services is immaterial for purposes of establishing a violation of either the Stark Law or the AKS.  In other words, if the recipient of items and services donated by a donor already possesses equivalent items and services, the donor's lack of actual knowledge, deliberate ignorance or reckless disregard of the recipient's possession of these items and services is immaterial for purposes of analyzing whether the donor, and possibly the recipient, violated either the Stark Law or the AKS.

The EHR Rules
The Stark Law exception and the AKS safe harbor for EHR are somewhat more complex than those for eRX.  In fact, they do not allow donation of hardware and require recipients to pay at least 15 percent of the donor's cost of items and services provided to them. Therefore, there will be some cost involved for physicians and physician group practices even if they receive donations of EHR equipment and services from donors. 

Also, in order to comply with the Stark Law exception and AKS safe harbor, donors and physicians/physician group practices must meet the following conditions: 

• The items and services donated must include only the necessary software or information technology and training predominately used to create, maintain, transmit or receive EHR, and such items and services cannot include staffing nor can they be used for a physician's or physician group practice's personal or unrelated business.
• Any software must be inter-operable and include eRX capability which meets Medicare Part D standards.
• A donor cannot restrict the use of items or services donated, or their compatibility or inter-operability with other EHR or eRX systems.
• A physician's or physician group practice's eligibility for receiving donated items or services cannot be based upon the volume or value of referrals the physician or physician group practice may make to a donor.
• A donor (in particular a hospital and hospital systems) cannot shift the cost of donated items or services to any federal health care program.
• A donation arrangement cannot violate other laws (this applies to the Stark Law exception only).
• The parties must sign a written agreement covering all of the items and services donated and disclosing the donor's cost of the items and services.
• All conditions of any such donations must be met and made before December 31, 2013.

As with the Stark Law exception and the AKS safe harbor for eRX, a donor's lack of actual knowledge, deliberate ignorance or reckless disregard concerning a recipient's possession of equivalent items or services is immaterial for purposes of establishing a violation of either the Stark Law or the AKS.

Given the complexity and detail of these new exceptions and safe harbors, physicians and physician group practices would be well served to carefully analyze any donation arrangements or transactions and to retain appropriate health care legal counsel to assist them with structuring any such types of arrangements or transactions.

Michael R. Lowe, Esq. is a board-certified health law attorney and shareholder at Michael R. Lowe, P.A.  Located in Longwood, Florida, Mr. Lowe specializes in health care law with an emphasis on the representation of physicians and physician group practices.  He may be reached at (407) 332-6353 or mlowe@lowehealthlaw.com.

http://www.lowehealthlaw.com/

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