Health Law Daily Wrap Up, ELECTRONIC HEALTH RECORDS—PROPOSED RULES: CMS proposes changes to the EHR donation exception to the physician self-referral prohibition, (Apr 10, 2013)

By Harold M. Bishop, JD

The current exception to the physician self-referral prohibition for certain donations of electronic health records (EHR) items and services would be amended in three ways pursuant to a CMS proposal (Proposed rule, 78 FR 21308, April 10, 2013). The proposed rule would (1) update the provision under which EHR software is deemed interoperable; (2) remove the requirement related to electronic prescribing capability from the exception; and (3) extend the sunset date of the exception. In addition, CMS is requesting public comment on limiting the scope of protected donors and adding or modifying conditions to limit the risk of data and referral lock-in. Simultaneous with this CMS proposal, the HHS Office of Inspector General (OIG) is proposing almost identical changes to the anti-kickback statute EHR safe harbor regulations (78 FR 21314). Comments on both of these proposed rules may be submitted through June 10, 2013.

Physician self-referral rules and exceptions. Section 1877 of the Soc. Sec. Act, 42 U.S.C. sec. 1395nn, known as the physician self-referral law: (1) prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she or an immediate family member has an ownership interest or compensation arrangement, unless an exception applies; and (2) prohibits the entity from submitting claims to Medicare for those referred services, unless an exception applies. 42 U.S.C. sec. 1395nn(b)(4) establishes a number of exceptions and grants the Secretary of HHS the authority to create additional regulatory exceptions for financial relationships that do not pose a risk of program or patient abuse. Based on this authority, on August 8, 2006 (71 FR 45140), CMS published a final rule that, among other things, finalized at 42 CFR 411.357(w) an EHR exception to the physician self-referral prohibition for protecting certain arrangements involving interoperable EHR software or information technology and training services.

The deeming provision. The current EHR exception to the physician self-referral law specifies at 42 CFR 411.357(w)(2) that the donated software must be interoperable at the time it is provided to the physician. The current provisions of the EHR exception state that “software is deemed to be interoperable if a certifying body recognized by the Secretary has certified the software no more than 12 months prior to the date it is provided to the physician.” CMS proposes to modify (1) 42 CFR 411.357(w)(2) to reflect that the Office of the National Coordinator for Health Information Technology (ONC-HIT) is responsible for “recognizing” certifying bodies; and (2) the portion of this provision concerning the time period within which the software must have been certified.

Currently, the EHR exception deeming provision requires that software must have been certified within no more than 12 months prior to the date of donation in order to ensure that products have an up-to-date certification. Subsequent to issuing the final EHR exception, however, ONC developed a regulatory process for adopting certification criteria and standards that is anticipated to occur on a 2-year regulatory interval. As a result, CMS proposes to modify this portion of the exception by removing the 12-month timeframe and substituting a provision stating that software would be eligible for deeming if, on the date it is provided to the recipient, it has been certified to any edition of the EHR certification criteria that is identified in the then applicable definition of Certified EHR Technology in 45 CFR part 170.

Electronic prescribing provision. The current EHR exception at 42 CFR 411.357(w)(11) provides that the donated software must “contain… electronic prescribing capability, either through an electronic prescribing component or the ability to interface with the physician’s existing electronic prescribing system that meets the applicable standards under Medicare Part D at the time the items and services are provided.” However, in light of developments since the 2006 final rule, OIG does not believe that it is necessary to retain a requirement related to electronic prescribing capability in the EHR exception.

First, in 2006, the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) (P.L. 110-275) was enacted authorizing an electronic prescribing incentive program for certain types of eligible professionals. Second, in 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act, Title XIII of the American Recovery and Reinvestment Act of 2009 (ARRA) (P.L. 111-5) authorized eligible professionals under the Medicare and Medicaid EHR incentive programs to demonstrate meaningful use of certified EHR technology, including the use of electronic prescribing.

Third, the industry has made great progress related to electronic prescribing. Recent analysis by ONC notes an increase in the percentage of physicians electronically prescribing via EHR technology from 7 percent in 2008 to 48 percent in 2012. Furthermore, the regulations published in September 2012 to implement Stage 2 of the EHR Incentive Programs continue to encourage physicians’ use of electronic prescribing technology. In light of these developments, OIG proposes to delete the electronic prescribing condition at 42 CFR 411.357(w)(11). OIG believes that there are sufficient alternative policy drivers supporting the adoption of electronic prescribing capabilities.

Sunset provision. The EHR exception is scheduled to sunset on December 31, 2013. The OIG proposes to extend the sunset date to December 31, 2016, which corresponds to the last year in which one may receive Medicare EHR incentive payments and the last year in which one may initiate participation in the Medicaid EHR incentive program. As an alternative, OIG would also consider extending the sunset date to December 31, 2021, which corresponds to the end of the EHR Medicaid incentives.

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