How do recent changes to the EHR donation program affect practices seeking to adopt EHRs?

Q: How do recent changes to the EHR donation program affect practices seeking to adopt EHRs?

A: As of Jan. 1, 2014, pathology labs can no longer donate EHR software to physicians because labs have been removed from the category of donors that are covered by the Stark exception and anti-kickback law. Donations are still permitted, but labs can no longer participate. Donation transactions need to be carefully reviewed by a practice attorney to ensure full compliance with federal and state laws. Further, donations cannot be dependent upon a guarantee of referrals. This type of quid pro quo arrangement would be a violation. 

This is a result of changes made by the Office of Inspector General (OIG) and the Centers for Medicare and Medicaid Services (CMS), which released their final rules in December 2013 regarding EHR donations under the anti-kickback statute safe harbor and Stark law exception.  

Q: What does the extension of the EHR safe harbor mean for my practice?

The program has been extended through Dec. 31, 2021, which means that other qualified entities (i.e., hospitals) can continue to offer EHR donations to physicians under current OIG and CMS rules. If your practice is interested in seeking EHR assistance, you are advised to work with your practice attorney to explore options that comply with all applicable state and federal laws. Donors and recipients of EHR donations can be subject to significant penalties for violation of either the anti-kickback law or the Stark law. These penalties include:

  • Civil monetary penalties. 
  • Exclusion from Medicare and Medicaid programs.
  • In the case of a violation of the anti-kickback law, criminal penalties of up to five years in prison.

Any claims submitted for services that involve an illegal relationship could also be subject to false claims penalties, which include triple the amount of the claim, plus $11,000 per claim. This could include claims the donor submits for services that the recipient referred, or claims submitted by the recipient who is using the EHR.

Q: What should a dermatology practice do if it has a donation agreement with a laboratory?

If your dermatology practice received donated EHR software from pathology lab up through the end of 2013, you and your donor were in full compliance. However, as of this year, the dermatology practice must now assume all financial responsibility of covering the cost of the EHR. By now the practice should have executed a written termination of the donation agreement with the former lab donor.  Consult your donor and/or practice attorney for further guidance. 

Q: What should a dermatology practice do if it is still interested in seeking a donation for its EHR?

Even under the revised safe harbor and Stark exception, a donation of an EHR cannot be dependent upon referrals to the donor from the recipient. Although laboratories are now excluded from this program, other donor entities may be able to provide EHR donor assistance and must comply fully with all of the criteria of the applicable safe harbor and Stark exception. Remember, no donation can be dependent upon an agreement to make referrals to the donor. 

Q: How do these revised federal regulations relate to state laws and regulations governing EHR donations? 

In light of recent changes to this program at the federal level, it’s equally important to factor in how your state law addresses this issue. 

A growing number of states — including Missouri, New Jersey, New York, Pennsylvania, Tennessee, Washington, and West Virginia — have prohibited or restricted donations of EHRs to address concerns about fraud and abusive business practices. For example, although California permits donations for EHRs, no donation of an EHR by a laboratory would be permitted in California if there were referrals for Medicare and Medicaid services between the laboratory and the recipient. 

It is important for dermatology practices to carefully review their state laws and regulations. Some states’ guidance relies upon the federal safe harbor and exception for EHR donations. In the future, some states might also include exclusions for laboratory donations, to the extent they rely upon the federal safe harbor or Stark exception.

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