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Will Federal Protection for EHR Donations Be Extended Beyond December 31, 2013?

Rumors are circulating that the Centers for Medicare & Medicaid Services (CMS) and the Office of Inspector General for the Department of Health and Human Services (OIG) will continue to allow the donation of electronic health records (EHR) items and services to physicians past the current deadline of December 31, 2013.  CMS recently submitted to the Office of Management and Budget (OMB) a proposed rule entitled "Physicians' Referrals to Health Care Entities with which They have Financial Relationships; Amending the Exception for Certain Electronic Health Records Arrangements (CMS-1454-P)," and the OIG has submitted a similarly titled proposal.  Speculation is circulating that these proposals seek to extend the exception to the Stark Law and the safe harbor under the Anti-Kickback Statute that permit certain donors, including laboratories and hospitals, to donate EHR items and services to physicians if certain requirements are met.  Theresa Carnegie and I previously outlined the history  and requirements of the exception and safe harbor in an article published in the G-2 Compliance Report.

The EHR donation exception and safe harbor have generated considerable controversy since their publication in 2006.  While everyone in the health care industry would agree that widespread adoption of EHR technology is an important goal, there is disagreement regarding whether the exception and safe harbor are a good idea.  For example, the College of American Pathologists has previously urged OIG to reconsider its inclusion of laboratories as protected donors, and the American Clinical Laboratory Association has questioned whether the safe harbor and exception are needed now that physicians who engage in "meaningful use" of EHR technology can qualify to receive incentive payments from the federal government.  In contrast, the Federation of American Hospitals supports extension of the safe harbor and exception through 2016.

Representative Jim McDermott (D-Wash.) contributed to the debate this week by writing a letter asking the OIG's Chief Counsel to renew the safe harbor for EHR donations.  He noted that "Congress is particularly interested in developing and continuing initiatives that are designed to reduce health care costs" and that care coordination through use of EHR technology can decrease such costs.  This letter is interesting given that in November 2012 the Attorney General of Washington issued an opinion stating that a clinical laboratory violates Washington's kickback prohibition if it shares the cost of EHR software with a Washington physician and subsequently receives orders for testing from the physician.  The opinion made clear that the federal safe harbor does not preempt similar state laws.

Washington is not the only state to place limitations on EHR donations even though they are permitted under federal law.  Agencies in states such as Missouri, New Jersey, New York, Pennsylvania, Tennessee, and West Virginia also have spoken on this issue.  If CMS and OIG decide to extend federal protection for EHR donations, other states may follow suit.

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Karen S. Lovitch

Chair, Health Law Practice & Co-Chair, Health Care Enforcement Defense Practice

Karen advises industry clients on regulatory, transactional, operational, and enforcement matters. She has deep experience handling FCA investigations and qui tam litigation for laboratories and diagnostics companies.