• The New Anti-Kickback Safe Harbors and Stark Exceptions for Electronic Health Records and Prescribing Systems
  • November 9, 2006
  • Law Firm: Miller Nash LLP - Portland Office
  • On August 8, 2006, the Office of Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS) each passed final regulations that provide additional protections under the federal Anti-Kickback Statute and the Stark Act for certain nonmonetary arrangements among health care entities involving the donation of items and services for use in electronic health record ("e-record") and electronic prescribing ("e-prescribing") systems. The regulations were effective on October 10, 2006. For the most part, the safe harbors created under the Anti-Kickback Statute and the exceptions finalized under the Stark Act are substantially similar, with a few differences noted between the anti-kickback safe harbor and the Stark exception for e-record systems.

    The following information highlights those regulations:

    A. General Overview

    1. Donors may not provide e-prescribing or e-records technology to a recipient if the recipient already possesses equivalent technology. Donors wishing to provide recipients with certain technology will want to do some due diligence regarding what technology recipients have before making any donations.

    2. E-prescribing technology must be used solely to receive and transmit electronic prescription information and for no other purpose. E-records technology must be used predominantly to create, maintain, transmit, or receive electronic health record information, but may be used for other limited activities such as patient billing or scheduling.

    3. Only e-prescribing technology may include hardware. The e-records safe harbor/exception is limited to software and information technology training and services (but does not include the provision of staff to transfer hard-copy records to electronic records).

    4. The recipient of donated e-records technology must pay, in advance, 15% of the donor's cost of the donated technology. A donor's imposition of different cost-sharing requirements on different recipients could give rise to an inference that the arrangement is directly related to the volume or value of referrals and would thus be ineligible for protection under these new regulations.

    5. Both e-prescribing and e-records technology must be able to work with other electronic prescribing or electronic health records systems. Restrictions on use, compatibility, or interoperability are prohibited, and will impair the availability of the safe harbors/exceptions.

    6. The new Stark exceptions are different from and do not replace the previously enacted Stark exception for "community-wide information systems." The e-prescribing and e-records Stark exceptions represent a dramatic expansion of the Stark protections for information technology while also containing certain requirements not found in the "community-wide information systems" exception.

    B. E-Records Safe Harbor/Exception

    (Note: The anti-kickback safe harbor and the Stark exception for e-records technology are substantially similar, with a few differences noted below.)

    1. For purposes of the anti-kickback safe harbor, any donation of e-records technology must be provided to an individual or entity engaged in the delivery of health care and provided by either:

    a. an individual or entity that provides services covered by a federal health care program and submits claims or requests for payment, either directly or through reassignment, to the federal health care program; or

    b. a health plan.

    The Stark exception applies only when e-records technology is provided by a designated health services entity (e.g., clinical laboratory, durable medical equipment (DME) supplier, home health services entity, radiology center, hospital) to a physician.

    2. Donated e-records technology may be software and information technology/training services, which are necessary to create, maintain, transmit, or receive electronic health record information and must be used predominantly for this purpose.

    3. The donor may not have actual knowledge of, or act in reckless disregard or deliberate ignorance of, the fact that the recipient already possesses e-records technology equivalent to that provided by the donor.

    4. Software provided as part of e-records technology must be interoperable as determined by a certifying body recognized by the Department of Health and Human Services. The donor may not take any action to limit the use, compatibility, or interoperability of the e-records technology.

    5. Software provided as part of e-records technology must contain electronic prescribing capability, through either an electronic prescribing component or the ability to interface with the recipient's existing electronic prescribing system.

    6. The donor of the e-records technology cannot condition the provision of e-records technology in a manner that takes into account the volume or value of referrals or other business generated between the parties.

    7. The recipient of the e-records technology cannot condition doing business with the donor on the receipt of e-records technology.

    8. The items or services provided as e-records technology may not include staffing of the recipient's office and may not be used primarily to conduct personal business or business unrelated to the recipient's clinical practice or clinical operations.

    9. The recipient must pay 15% of the cost of the donated e-records technology. Neither the donor nor any affiliated individual or entity may finance the recipient's payment or loan funds to be used by the recipient to pay for this contribution.

    10. The arrangement must be set forth in a written agreement that is signed by the parties, describes the e-records technology being donated, states the donor's cost of the e-records technology, identifies the recipient's contribution, and covers all the e-records technology provided between the parties (including subsequent upgrades and updates).

    11. The transfer of e-records technology must occur, and all conditions must be met, on or before December 31, 2013, at which time the regulations sunset.

    C. E-Prescribing Safe Harbor/Stark Exception

    (Note: The anti-kickback safe harbor and the Stark exception for e-prescribing items and services are nearly identical, with no substantive differences.)

    1. Donated e-prescribing technology may include hardware, software, and information technology and/or training services that are necessary and used solely to receive and transmit electronic prescription information.

    2. Donations of e-prescribing technology may be made in the context of four donor-recipient relationships:

    a. hospitals and their medical staff members;

    b. group practices and their individual providers;

    c. Medicare Physician Drug Plan (PDP) sponsors and their network pharmacies and prescribing physicians; and

    d. Medicare Advantage (MA) organizations and their network pharmacies and participating providers.

    3. The donor cannot have actual knowledge of, or act in reckless disregard or deliberate ignorance of, information demonstrating that the recipient already possesses e-prescribing technology equivalent to that being donated.

    4. E-prescribing technology must be provided as part of, or used to access, an electronic prescription drug program that meets the applicable standards under Medicare Part D.

    5. The donor of the e-prescribing technology may not take any action to limit the use or interoperability of the e-prescribing technology with other electronic prescribing or electronic health record systems.

    6. The donor cannot donate e-prescribing technology in a manner that takes into account the volume or value of referrals or other business generated between the parties.

    7. The recipient cannot condition doing business with the donor on the receipt of e-prescribing technology.

    8. The arrangement must be documented in a written agreement that is signed by the parties, describes the e-prescribing technology provided, states the cost of the donated technology, and covers all the technology that is provided between the parties (including subsequent upgrades and updates).