What are the new compliance risks associated with EHR system fees

OIG warns labs, EHR vendors, and physicians of compliance risks associated with certain fees for system interface

(The following information was compiled and reviewed by the Academy's practice management team.)

The Office of Inspector General of the Department of Health and Human Services (OIG) released an advisory opinion on April 1, 2014, concluding that payment arrangements between a physician, clinical laboratory, and EHR developer may violate the federal Anti-Kickback Statute if the transmission fee to request a diagnostic test through the EHR system is incurred by the laboratory instead of the referring physician, based solely upon the physician’s choice of laboratory.

Advisory Opinion 14-03 follows an earlier advisory opinion from 2011, Advisory Opinion 11-18, in which substantively the same arrangement was reviewed by the OIG. In Advisory Opinion 11-18, the OIG determined the $1 transmission fee would not present a risk under the anti-kickback law. It appears as though the OIG failed to understand in the original advisory opinion the volume of $1 transmission fees, and now understands the significant aggregate financial benefit to the referring physicians in this new advisory opinion.

The OIG determined that since the referring physicians would not incur the transmission fees when they referred to “in-network” laboratories (those who have a contract with the vendor), the arrangement would implicate the anti-kickback law. The OIG reasoned that because the referring physicians are relieved of a financial obligation when they refer laboratory tests to the "in-network" contracted laboratory, the arrangement poses more than a minimal risk of fraud and abuse under the anti-kickback law.

In April 2014, the OIG issued final notice of its termination of Advisory Opinion 11-18, explaining the OIG now concludes the financial incentive could induce the referring physicians to select "in-network" laboratories rather than other laboratories, particularly for frequently ordered tests. The new advisory opinion is, therefore, likely to be lauded by many laboratory and pathology providers.

Q: What type of arrangement is covered by Advisory Opinion 14-03?

A: The laboratory arrangement at issue in Advisory Opinion 14-03 was with an electronic health records (“EHR”) services vendor under which the “in-network” laboratory pays a per-order fee (Per-Order Fee) for each set of tests a referring physician orders using the vendor’s EHR services. If the referring physician does not order laboratory tests from an “in-network” laboratory, then the referring physician is charged a transmission fee of up to $1 each time the referring physician uses the vendor’s EHR services to order laboratory tests from a laboratory that is not “in-network.” If the referring physician uses the vendor’s EHR services to order tests from an "in-network” laboratory, the referring physician is not assessed a transmission fee. Rather, the “in-network” laboratory pays the Per-Order Fee for the referring physician’s order. The referring physician, therefore, has the option to pay a transmission fee or to avoid paying that same fee by choosing an “in-network” laboratory. The Per-Order Fees are not capped and decrease as the number of test order referrals increase.

Q: What type of arrangement was covered by the now terminated Advisory Opinion 11-18?

A: The laboratory arrangement at issue in Advisory Opinion 11-18 was also with an EHR services vendor. The vendor entered into agreements with potential referral recipients whereby they could be deemed a “Trading Partner” in conjunction with the vendor’s coordination services. Practices purchasing the vendor’s coordination package received a discount on their monthly EHR subscription fees otherwise due to the vendor. If the practice used the coordination service to refer to a Trading Partner, there would be no fee or other financial impact. Each time, though a practice referred to a non-Trading Partner, the practice’s discount was reduced on a per-referral basis up to an aggregate amount equal to the discount.

Q: Does Advisory Opinion 14-03 affect all per-transaction fees? 

A: Potentially, yes. The advisory opinion specifically addressed Per-Order Fees, but the analysis could be expanded to any per-order or per-transaction or per-result fee that constitutes a transfer of cost from the referring physician to the laboratory or relief of a financial obligation in return for the referring physician’s laboratory test referral. Advisory Opinion 14-03 is a reminder that a kickback is not limited to paying proscribed remuneration but can also include relieving a party of a payment obligation.

Q4: Can electronic health record systems (EHRs) still be donated by a laboratory? 

A: No. As of January 1, 2014, laboratories can no longer donate EHRs. Other types of providers can donate, as long as all criteria of the Stark exception and anti-kickback safe harbor are met. For more information, refer to the February 28, 2014 Member to Member issue.

Q: Can a laboratory still provide an interface? 

A: Yes.  An interface that is used solely for the transmittal of requisitions and orders and/or the delivery of pathology reports between the laboratory and the referral source is comparable to the provision of computer terminals and fax machines for the same purposes. In Advisory Opinion 12-20, the OIG determined that it was permissible for a laboratory to provide the electronic interface to a referral source for the purpose of transmitting orders and results, as long as the interface has no independent use to the referral source (i.e., that the interface connects only between the referral source and the laboratory, and not to any other party). 

Q: What should I do if my EHR sounds like the one covered by Advisory Opinion 14-03 or Advisory Opinion 11-18?

A: If your EHR sounds like the one covered by Advisory Opinion 14-03 or Advisory Opinion 11-18, you should immediately contact your EHR vendor to determine whether certain changes to the arrangement can be made.The easiest change is to have referring physicians pay the same transaction fee regardless of whether the laboratory is in-network or out-of-network. Alternatively, in order to avoid the presumption that the sole basis for Per-Order Fee is to secure referrals, the EHR vendor can offer additional benefits, technological or otherwise, to the laboratory. If the EHR vendor is unwilling to make either of these changes, or take some action similar thereto, the practice should consult with its counsel to determine what options it may have under its contract with the EHR vendor.

Q: Where can I find the OIG’s Advisory Opinion 11-18?

A. Please see http://oig.hhs.gov/fraud/docs/advisoryopinions/2014/AdvOpn14-03.pdf or visit the OIG’s website at http://oig.hhs.gov/compliance/advisory-opinions/index.asp

For additional guidance from the Academy, please email hit@aad.org.

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