Key Lessons Related to Stark Compliant EHR Donation Arrangements

Is your entity thinking about engaging in a Stark/AKS Compliant EHR Donation Arrangement?  If so, check out this list of top 5 issues to consider as you are assessing your options and your health IT alignment strategy.

1.  An EHR donation arrangement is an effective way for hospitals to align with their physicians.

In the world of health information exchange, having the technological ability to seamlessly communicate with a hospital or referring physician is crucial to effective patient care.  It enables physicians and hospitals alike to efficiently obtain patient information and to exchange this information as needed to ensure quality patient care.

2.  There are specific rules – and significant consequences for breaking those rules.

Be careful not to run afoul of the Stark or Anti-Kickback rules.  Ensure that your contracts are compliant with both Stark and Anti-Kickback and that the arrangement is not designed at rewarding referring physicians.  

3.  What is the hospital taking on when it becomes an EHR vendor?  

What are the consequences for a physician practice if the local hospital is also its EHR vendor?  In many arrangements the hospital is the contracting party with the EHR software vendor (i.e. Epic, Cerner, etc.) and owns the relationship.  Physician groups will look to the hospital to obtain necessary service, updates, modules and when the system malfunctions.  The hospital should evaluate if it is able to take on this role.

4.  Physicians need to know what to expect as recipients of an EHR donation.

Often times the physician group is giving up its autonomy in choosing the EHR vendor, configuration or customization and must often defer to the hospital to make appropriate purchase, upgrade and service decisions.  In addition, even though the hospital may be picking up the majority of the costs (no more than 85%) the investment may still be expensive (and will likely exceed the meaningful use incentive dollars).  Items such as hardware, storage, and operating system software are excluded from the donation.    

5.  Before you align, be clear about who will get the “record collection” if things don’t turn out.

Before entering into a donation arrangement the parties should have a clear understanding of what happens if the relationship goes awry.  How will the records be divided, extracted, or migrated into a new system?  Will the physician group be able to maintain a relationship with the software vendor independently?  What are the ramifications of changing vendors and separating from the hospital EHR?

Special thanks to ECG’s Michelle Holmes and OMW attorney David Schoolcraft for composing this list based on their HIMSS14 presentation “Using Stark/Anti-Kickback to Support Hospital/Physician IT Alignment Strategies.

For more information on designing Stark/Anti-Kickback compliant donation arrangements please see the previous posts describing the exception requirements and the 2013 updates.  For assistance in creating a donation arrangement please contact Elana ZanaMichelle Holmes or David Schoolcraft.


Understanding Stark/Anti-Kickback Compliant EHR Donation Arrangements

In 2006 and extended in December 2013, CMS issued Stark and Anti-Kickback exceptions/safe harbors permitting EHR technology donation arrangements between hospitals (and other organizations) and physician groups.  This exception permitted hospitals to aid physician groups, who may be referral sources, in acquiring and implementing EHR and other health information technology.  Originally, hospitals had a seven-year window in which to engage in these donation arrangements, though in December 2013 CMS extended the donation arrangements for an additional 7 years through December 31, 2021.

The arrangement may include the non-monetary donation of “items or services in the form of software or information technology and training services.”  Key components of the exception/safe harbor include:

  • The donation is provided from an entity to a physician.
    • Change in 2013 rules, this entity cannot be a lab.
  • The software is interoperable
    • Change in  2013 rules, software is deemed interoperable if it has been certified as “certified EHR technology” as that term is used by the ONC for the meaningful use/EHR Incentive Program.
  • Donor cannot restrict or limit the use or interoperability of the technology with other eRx or EHR systems.
    • Change in 2013 rules, CMS interprets this rule more broadly by providing a non-exclusive list of the types of technologies that are included in this restriction: “health information technology applications, products, or services.”
  • Physician must pay at least 15% of the costs for the technology (which amount cannot be financed by the hospital).
  • Neither the physician nor the physician’s practice makes the receipt of the technology a condition of doing business with the donor.
  • Neither eligibility of the physician nor the amount or nature of the donation is determined in a manner that takes into account the volume or value of referrals or other business generated between the parties.
  • The donation is set forth in writing, signed by the parties, specifies the items to be provided, the donor’s costs and the physician’s contribution, and covers all EHR items and services to be provided by the donor.
  • The donor cannot have knowledge of or disregard the fact that the physician already possesses equivalent items or services.
  • The donor cannot restrict or limit the physician’s right to use the software for any patient.
  • The donation cannot include staffing of physician offices and cannot be used to primarily conduct personal business or business unrelated to the physician’s medical practice.
    • Note the donation may also include other “software and functionality directly related to the care and treatment of individual patients (for example, patient administration, scheduling functions, billing, clinical support software, etc.” (71 FR 45152).
  • The donation arrangement does not violate the Anti-Kickback statute.
  • The exception expires December 31, 2021.

Beyond crafting a donation arrangement that satisfies both the Stark law exception and Anti-Kickback safe harbor, hospitals and physicians should assess overall technology alignment strategies and the goals and framework for such donation arrangements.  Making sure that clear expectations are set in advance, including understanding implementation, roll out and support, data ownership and extraction, and utilizing the EHR technology for government incentive programs, such as meaningful use, are important topics that should be addressed by the arrangement.

For those interested in learning more about this topic and are currently attending HIMSS14, David Schoolcraft, attorney at Ogden Murphy Wallace, and Michelle Holmes, principal at ECG Management Consultants, are presenting on Wednesday at 10 AM on Using Stark/Anti-Kickback To Support Hospital/Physician IT Alignment Strategies.  For further information about designing a compliant arrangement please contact Elana Zana or Dave Schoolcraft.