What Hospitals Should Know about EHR Donations to Practices

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EHR-thumb5The laws for underwriting the cost of EHR software for affiliated practices was recently extended and revised, reports Michelle Holmes at Information Week. So what are the broader implications of this for hospitals?

First, some background on the laws in question.

According to Holmes, “[T]he Stark Law (or physician self-referral statute) prohibits a physician from referring services to a hospital (among other entities) with which they have a financial relationship; if a referral is made, the hospital cannot bill Medicare for the service, unless the OIG publishes a specific exception. That’s what happened in August 2006, with a rule allowing physicians and hospitals to maintain their referral patterns even if the hospital provides the physicians with an EHR.

“Second, the anti-kickback statute (AKS) stipulates federal penalties (including significant fines and even prison) if a hospital or physician (again, among other entities) gives or receives remuneration that results in referrals. The AKS safe harbor that was introduced by CMS in 2006 does not say that it is acceptable to make or accept bribes — but it does say that a hospital can donate an EHR to a physician without being subject to AKS sanctions, as long [as] inducing referrals is not the hospital’s reason for providing the EHR.”

Both the Stark law exception and the AKS safe harbor were supposed to expire on Dec. 31, 2013, she continues. But the revisions released by CMS and the OIG on Dec. 23, 2013, extended the application of the Stark law exception and AKS safe harbor until 2021.

Holmes writes: “If the exception and safe harbor were not extended, hospitals with active donation arrangements would have had to change their pricing strategies, most likely to a Fair Market Value (FMV) arrangement – which requires that the FMV be determined with consideration to both the hospital’s actual costs and market benchmarks.”

So, how does this impact your hospital? If you took advantage of the laws’ exceptions in 2006, she writes, there are three changes to the “donation parameters” of which you should be aware: a.) “the elimination of the ePrescribing capability requirement which was determined to be redundant with other government programs”; b.) “the new rule clarified the hospital’s inability to limit interoperability between the donated EHR and other technologies”; and c.) “the interoperability certification requirement was aligned with the CMS EHR Incentive Programs.”

From a legal perspective, Ogden, Murphy, Wallace, PLLC attorney Elana Zana said, “The modification of the interoperability deeming provision to deem certified EHR technology as interoperable encourages hospitals and physician groups to work with each other to meet Meaningful Use. Now not only does the donation arrangement exception provide an avenue for the purchase of electronic health records but aligning the certification with the Meaningful Use standards further enables physician groups to avoid payment adjustments and possibly qualify for incentive dollars.”

What if you didn’t participate in the original 2006 ruling and were delaying participation pending the expiration of the exceptions?

Holmes offers: “These hospital executives need to now understand what they can and cannot include in the donation, what criteria can be used when selecting donation recipients, and how to establish donor’s costs and physician prices. The Internal Revenue Service (IRS), for example, has indicated that the donation must be provided to all medical staff, however there may be some stratification of the donation based on community benefit. Therefore, there is ambiguity and opportunity in identifying participants and crafting the donation criteria. Contract terms addressing issues like term and termination, service level agreements, data ownership and transferability, and conditions for participation are similarly vitally important.”

If an organization has comparable technology, for instance, EHR donations to that organization are limited. “Hospital EHR donation recipients therefore are much more likely to be replacing a legacy EHR system with that provided by the hospital; the nuances of upgraded and enhanced integration to differentiate the new EHR so that a donation is permissible have significant implications.”

The article details some of the additional nuances within the rules and is worth a look. As hospital executives, how do you handle EHR donations to affiliated practices in a way that is in accordance with the law? Are there any aspects of the law that causes the implementation of EHR within your community to be difficult?

-by Pete Fernbaugh

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