The Department of Health and Human Services and the Centers for Medicare & Medicaid Services issued long-awaited final rules last month that extend the sunset dates for exceptions under the Stark Law and the safe-harbor under the Anti-Kickback Statute for donations involving electronic health record items and services.

In August 2006, CMS and the department's Office of Inspector General published the original final rules as part of the government's efforts to encourage the use of electronic health records (EHR) technology by alleviating the high costs of its implantation and operation. The final rules allowed health care entities to donate up to 85 percent of the cost of EHR technology to physicians under certain circumstances.

The 2006 final rules included a Dec. 31, 2013, sunset provision for the Stark Law exception and the Anti-Kickback safe harbor for donations of EHR technology. “Had those provisions been allowed to sunset, physicians would have had to pay fair-market value for EHR-related items and services, which would have resulted in a dramatic increase in the cost to physicians of using EHR technology and presumably a corresponding decrease in the willingness of physicians to use such technology,” Jon Gatto, a partner of the law firm Carlton Fields Jorden Burt, wrote in a client alert.

The new final rules, issued on Dec. 27, extend the sunset date to Dec. 31, 2021.

In a statement, the Healthcare Information and Management Systems Society (HIMSS) expressed its support of the Stark and anti-kickback extensions. “HIMSS has historically supported making permanent and expanding the Stark exemptions and anti-kickback safe harbors beyond software and services used predominantly for EHRs.”

HIMSS added that, “although we encourage the elimination of the sunset provision, we appreciate the extension of the program to 2021 to provide certainty to stakeholders.”

The practical implications of the extending of the sunset provisions “presents current donors the option of continuing to subsidize EHR items and services for physicians and other recipients without incurring liability under the Stark Law or Anti-Kickback Statute,” according to a client alert from law firm Davis Wright Tremaine. “It also grants other potential donors additional time to enter into EHR donation arrangements with physicians and others.”

Other Revisions

The new final rules include several other changes to the 2006 rules. For one, it excludes laboratory companies from the types of entities that may donate EHR items and services.

The final rules require that donated EHR technology must be “interoperable” as of the date it is donated. Under the final rule, EHR technology will be deemed to be interoperable if, on the date that the software is provided to the recipient, it has been certified to reflect the current HHS Office of the National Coordinator for Health Information Technology's EHR certification criteria, based on the definition of Certified EHR Technology in the Medicare and Medicaid EHR Incentive Program regulations.  For a donation made in 2013, for example, the 2011 and 2014 certification criteria would be current.

The final rules also remove the requirements that donated EHR include electronic-prescribing capabilities, based on the agencies' conclusion that the e-prescribing requirement no longer is necessary to achieve the goal of adopting e-prescribing capabilities for EHR. “As a result of recent developments, physician adoption of electronic prescribing and electronic health records technology will continue to increase despite removal of the electronic prescribing capability requirement in the electronic health records exception,” the final rules stated.

CMS and OIG further clarify in the final rules that neither a donor “nor any person on the donor's behalf may take any action to limit or restrict the use, compatibility or interoperability of the donated items or services with other electronic prescribing or other EHR systems, including but not limited to health information technology applications, products or services.” 

If donors decide to extend subsidy arrangements beyond 2013, they should ensure that the current terms of their EHR donation contracts permit the donor to provide subsidized EHR items or services beyond Dec. 31, 2013, “as some contracts may have been drafted to prohibit subsidies beyond the original sunset date,” advised the Davis Wright Tremaine client alert. “Donors should amend their existing EHR donation contracts as appropriate to address any subsidy extensions and modifications to the donation requirements.”

With the exception of the amendments to the sunset provisions, which take effect immediately, the amended regulations will take effect March 27, 2014.