Electronic Health Records Safe Harbors Set to Expire in December 2013

As of now, hospitals that provide electronic health records assistance to referral sources such as independent physician group practices can rely on exceptions to the federal Stark Law and the federal Anti-Kickback Statute. However, those exceptions are scheduled to expire on Dec. 31, 2013. If they do expire, then such assistance may become illegal.

In 2006, the Centers for Medicare and Medicaid Services and the Office of the Inspector General created the Stark exception for the donations of electronic prescribing and EHR technology and training services  and the electronic health record items and services safe harbor under the AKS in order to incentivize the meaningful use of EHR systems nationwide. The Stark exception and the AKS safe harbor allow physician group practices (among others) to take advantage of nonmonetary remuneration from hospitals for the purpose of setting up or improving EHR systems.

However, the implementing regulations included sunset provisions, whereby both the Stark exception and the AKS safe harbor would expire on Dec. 31, 2013. The rationale for the sunset provisions was to address the agencies’ concern that ongoing remuneration associated with the referral source’s adoption and use of a particular EHR system (such as technical support) created potentially unacceptable long-term remuneration ties between the donors (hospitals) and recipients (physician group practices).

Since 2006, many hospitals and physician group practices have partnered to make good use of the Stark exception and AKS safe harbor. They have put into place important arrangements which, in addition to reducing paper and cost for the practice, also result in higher quality care for patients. For example, some hospitals have helped physician group practices implement EHR programs that allow patients to request appointments, view lab results and even email their physicians via a secure EHR web link. All of this allows patients to become more engaged participants in their care. Other EHR systems track health maintenance for patients and provide alerts to physicians and office staff that a patient is due for an important screening or appointment.

While EHR system implementation has come a long way, many hospitals and physician group practices have plans to enhance existing EHR systems and equip physician practices with other crucial EHR capabilities. However, if the Stark exception and the AKS safe harbor are allowed to expire at the end of 2013, those plans may be jeopardized, since many physician group practices cannot afford to implement EHR systems without assistance.

To date, neither CMS nor the OIG has indicated that they will be revising the regulations to remove or extend the sunset provision. Hospitals and their counsel should carefully monitor the situation over the coming months of 2013. If the Stark exception and AKS safe harbor are ultimately allowed to expire, hospitals will have to work quickly to evaluate their EHR arrangements and may need to carefully restructure, or even possibly terminate entirely, some EHR arrangements in order to be compliant with the fraud and abuse laws.