Date: April 2013

Sunset on the Horizon - The Impending Expiration of the Stark EHR Exceptions

Sunset on the Horizon: The Impending Expiration of the Stark EHR Exceptions The development of electronic health records has been a primary priority of American healthcare for the past several years. However, the costs of the development and implement of such systems can be prohibitive, particularly for smaller physician group practices. As a result, the government regulators created incentives to encourage and accelerate the implementation process. This has come in the form of financial subsidies as well as exceptions to the fraud and abuse laws. But the coordination of these incentives does not appear to have been well-planned, leading to a rapidly approaching deadline at the end of the year in which some of the fraud and abuse exceptions will expire prior to the full implementation of programs the government subsidies are meant to stimulate.

There are three exceptions to the Stark Law related to the provision of electronic information systems, prescribing systems, and health records to recipients (usually physician group practices) by donors (usually hospitals). One exception applies to the provision of community-wide health information systems, and two exceptions, created with the Medicare Modernization Act of 2003 and implemented on August 8, 2006, specifically apply to the donation of these electronic services to physicians who have a relationship with the hospital. One exception is for the provision of electronic prescribing items and services, and the other for electronic health records items and services (“EHR”). The Anti-Kickback Statute has safe harbors that roughly parallel these exceptions.

The EHR exception goes beyond electronic prescription information and extends more generally to electronic health records, defined to mean “a repository of consumer health status information in computer-processable form used for clinical diagnosis and treatment for a broad array of clinical conditions.” This exception applies to non-monetary remuneration (consisting of items and services in the form of software or information technology and training services) “necessary and used predominantly” to create, maintain, transmit, or receive EHR, provided thirteen specific conditions are satisfied, the most notable being that a recipient must pay 15% of the donor’s cost for the EHR items and services.

A sunset date (deadline) of December 31, 2013 was established for the CMS Stark exceptions and Anti-Kickback safe harbors for electronic prescribing and EHRs (the community- wide health information system exception does not expire). The sunset provision was intended to put pressure on health care providers to adopt an EHR more quickly, while limiting the potential for unacceptable long-term remuneration ties between the donors and the recipients.

However, many have complained that the sunset provision occurs too early in the EHR implementation process. Beginning in 2010, as part of the regulations associated with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), the Medicare and Medicaid EHR Incentive Programs began to provide financial incentives for the “meaningful use” of certified EHR technology to improve patient care. To receive an EHR incentive payment, providers must show that they are “meaningfully using” their EHRs by meeting thresholds for a number of objectives. The health care provider implements the EHR in stages, consisting of three steps with increasing requirements. All providers begin participating by meeting the Stage 1 requirements for a 90-day period in their first year of meaningful use and a full year in their second year of meaningful use. After meeting the Stage 1 requirements, providers will then have to meet Stage 2 requirements for two full years. The Medicare EHR Incentive program allows eligible providers and eligible hospitals until 2015 to adopt and implement EHR technology before Medicare penalties are levied for non-compliance. However, the sunset date for the Stark EHR exception predates this deadline, a problem as the allowance for EHR donations under the exception has been an impetus for physicians to buy into more integrated electronic health record programs.

As the sunset date nears, there is a growing opposition lobbying for Congress to make the exceptions permanent, or at least extend the date to correspond with the EHR Incentive Program requirements. On February 22, 2013, the Health Information Management Systems Society (HIMSS) published a letter to the Centers for Medicare and Medicaid Services that “strongly recommends removing the Sunset Provision and making the EHR Donation Rules a permanent exception.” HIMSS requested that this extension be implemented as soon as possible to prevent potential disruption of EHR programs at the end of this year. While the extension is a real possibility, hospitals that hope to use the exception as a route to increased physician participation in its EHR should act immediately in order to take advantage of the quickly closing opportunity to provide these benefits to physician groups.

Date: April 2013

Sunset on the Horizon - The Impending Expiration of the Stark EHR Exceptions

Sunset on the Horizon: The Impending Expiration of the Stark EHR Exceptions The development of electronic health records has been a primary priority of American healthcare for the past several years. However, the costs of the development and implement of such systems can be prohibitive, particularly for smaller physician group practices. As a result, the government regulators created incentives to encourage and accelerate the implementation process. This has come in the form of financial subsidies as well as exceptions to the fraud and abuse laws. But the coordination of these incentives does not appear to have been well-planned, leading to a rapidly approaching deadline at the end of the year in which some of the fraud and abuse exceptions will expire prior to the full implementation of programs the government subsidies are meant to stimulate.

There are three exceptions to the Stark Law related to the provision of electronic information systems, prescribing systems, and health records to recipients (usually physician group practices) by donors (usually hospitals). One exception applies to the provision of community-wide health information systems, and two exceptions, created with the Medicare Modernization Act of 2003 and implemented on August 8, 2006, specifically apply to the donation of these electronic services to physicians who have a relationship with the hospital. One exception is for the provision of electronic prescribing items and services, and the other for electronic health records items and services (“EHR”). The Anti-Kickback Statute has safe harbors that roughly parallel these exceptions.

The EHR exception goes beyond electronic prescription information and extends more generally to electronic health records, defined to mean “a repository of consumer health status information in computer-processable form used for clinical diagnosis and treatment for a broad array of clinical conditions.” This exception applies to non-monetary remuneration (consisting of items and services in the form of software or information technology and training services) “necessary and used predominantly” to create, maintain, transmit, or receive EHR, provided thirteen specific conditions are satisfied, the most notable being that a recipient must pay 15% of the donor’s cost for the EHR items and services.

A sunset date (deadline) of December 31, 2013 was established for the CMS Stark exceptions and Anti-Kickback safe harbors for electronic prescribing and EHRs (the community- wide health information system exception does not expire). The sunset provision was intended to put pressure on health care providers to adopt an EHR more quickly, while limiting the potential for unacceptable long-term remuneration ties between the donors and the recipients.

However, many have complained that the sunset provision occurs too early in the EHR implementation process. Beginning in 2010, as part of the regulations associated with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), the Medicare and Medicaid EHR Incentive Programs began to provide financial incentives for the “meaningful use” of certified EHR technology to improve patient care. To receive an EHR incentive payment, providers must show that they are “meaningfully using” their EHRs by meeting thresholds for a number of objectives. The health care provider implements the EHR in stages, consisting of three steps with increasing requirements. All providers begin participating by meeting the Stage 1 requirements for a 90-day period in their first year of meaningful use and a full year in their second year of meaningful use. After meeting the Stage 1 requirements, providers will then have to meet Stage 2 requirements for two full years. The Medicare EHR Incentive program allows eligible providers and eligible hospitals until 2015 to adopt and implement EHR technology before Medicare penalties are levied for non-compliance. However, the sunset date for the Stark EHR exception predates this deadline, a problem as the allowance for EHR donations under the exception has been an impetus for physicians to buy into more integrated electronic health record programs.

As the sunset date nears, there is a growing opposition lobbying for Congress to make the exceptions permanent, or at least extend the date to correspond with the EHR Incentive Program requirements. On February 22, 2013, the Health Information Management Systems Society (HIMSS) published a letter to the Centers for Medicare and Medicaid Services that “strongly recommends removing the Sunset Provision and making the EHR Donation Rules a permanent exception.” HIMSS requested that this extension be implemented as soon as possible to prevent potential disruption of EHR programs at the end of this year. While the extension is a real possibility, hospitals that hope to use the exception as a route to increased physician participation in its EHR should act immediately in order to take advantage of the quickly closing opportunity to provide these benefits to physician groups.

Date: April 2013

Sunset on the Horizon - The Impending Expiration of the Stark EHR Exceptions

Sunset on the Horizon: The Impending Expiration of the Stark EHR Exceptions The development of electronic health records has been a primary priority of American healthcare for the past several years. However, the costs of the development and implement of such systems can be prohibitive, particularly for smaller physician group practices. As a result, the government regulators created incentives to encourage and accelerate the implementation process. This has come in the form of financial subsidies as well as exceptions to the fraud and abuse laws. But the coordination of these incentives does not appear to have been well-planned, leading to a rapidly approaching deadline at the end of the year in which some of the fraud and abuse exceptions will expire prior to the full implementation of programs the government subsidies are meant to stimulate.

There are three exceptions to the Stark Law related to the provision of electronic information systems, prescribing systems, and health records to recipients (usually physician group practices) by donors (usually hospitals). One exception applies to the provision of community-wide health information systems, and two exceptions, created with the Medicare Modernization Act of 2003 and implemented on August 8, 2006, specifically apply to the donation of these electronic services to physicians who have a relationship with the hospital. One exception is for the provision of electronic prescribing items and services, and the other for electronic health records items and services (“EHR”). The Anti-Kickback Statute has safe harbors that roughly parallel these exceptions.

The EHR exception goes beyond electronic prescription information and extends more generally to electronic health records, defined to mean “a repository of consumer health status information in computer-processable form used for clinical diagnosis and treatment for a broad array of clinical conditions.” This exception applies to non-monetary remuneration (consisting of items and services in the form of software or information technology and training services) “necessary and used predominantly” to create, maintain, transmit, or receive EHR, provided thirteen specific conditions are satisfied, the most notable being that a recipient must pay 15% of the donor’s cost for the EHR items and services.

A sunset date (deadline) of December 31, 2013 was established for the CMS Stark exceptions and Anti-Kickback safe harbors for electronic prescribing and EHRs (the community- wide health information system exception does not expire). The sunset provision was intended to put pressure on health care providers to adopt an EHR more quickly, while limiting the potential for unacceptable long-term remuneration ties between the donors and the recipients.

However, many have complained that the sunset provision occurs too early in the EHR implementation process. Beginning in 2010, as part of the regulations associated with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), the Medicare and Medicaid EHR Incentive Programs began to provide financial incentives for the “meaningful use” of certified EHR technology to improve patient care. To receive an EHR incentive payment, providers must show that they are “meaningfully using” their EHRs by meeting thresholds for a number of objectives. The health care provider implements the EHR in stages, consisting of three steps with increasing requirements. All providers begin participating by meeting the Stage 1 requirements for a 90-day period in their first year of meaningful use and a full year in their second year of meaningful use. After meeting the Stage 1 requirements, providers will then have to meet Stage 2 requirements for two full years. The Medicare EHR Incentive program allows eligible providers and eligible hospitals until 2015 to adopt and implement EHR technology before Medicare penalties are levied for non-compliance. However, the sunset date for the Stark EHR exception predates this deadline, a problem as the allowance for EHR donations under the exception has been an impetus for physicians to buy into more integrated electronic health record programs.

As the sunset date nears, there is a growing opposition lobbying for Congress to make the exceptions permanent, or at least extend the date to correspond with the EHR Incentive Program requirements. On February 22, 2013, the Health Information Management Systems Society (HIMSS) published a letter to the Centers for Medicare and Medicaid Services that “strongly recommends removing the Sunset Provision and making the EHR Donation Rules a permanent exception.” HIMSS requested that this extension be implemented as soon as possible to prevent potential disruption of EHR programs at the end of this year. While the extension is a real possibility, hospitals that hope to use the exception as a route to increased physician participation in its EHR should act immediately in order to take advantage of the quickly closing opportunity to provide these benefits to physician groups.

Date: April 2013

Sunset on the Horizon - The Impending Expiration of the Stark EHR Exceptions

Sunset on the Horizon: The Impending Expiration of the Stark EHR Exceptions The development of electronic health records has been a primary priority of American healthcare for the past several years. However, the costs of the development and implement of such systems can be prohibitive, particularly for smaller physician group practices. As a result, the government regulators created incentives to encourage and accelerate the implementation process. This has come in the form of financial subsidies as well as exceptions to the fraud and abuse laws. But the coordination of these incentives does not appear to have been well-planned, leading to a rapidly approaching deadline at the end of the year in which some of the fraud and abuse exceptions will expire prior to the full implementation of programs the government subsidies are meant to stimulate.

There are three exceptions to the Stark Law related to the provision of electronic information systems, prescribing systems, and health records to recipients (usually physician group practices) by donors (usually hospitals). One exception applies to the provision of community-wide health information systems, and two exceptions, created with the Medicare Modernization Act of 2003 and implemented on August 8, 2006, specifically apply to the donation of these electronic services to physicians who have a relationship with the hospital. One exception is for the provision of electronic prescribing items and services, and the other for electronic health records items and services (“EHR”). The Anti-Kickback Statute has safe harbors that roughly parallel these exceptions.

The EHR exception goes beyond electronic prescription information and extends more generally to electronic health records, defined to mean “a repository of consumer health status information in computer-processable form used for clinical diagnosis and treatment for a broad array of clinical conditions.” This exception applies to non-monetary remuneration (consisting of items and services in the form of software or information technology and training services) “necessary and used predominantly” to create, maintain, transmit, or receive EHR, provided thirteen specific conditions are satisfied, the most notable being that a recipient must pay 15% of the donor’s cost for the EHR items and services.

A sunset date (deadline) of December 31, 2013 was established for the CMS Stark exceptions and Anti-Kickback safe harbors for electronic prescribing and EHRs (the community- wide health information system exception does not expire). The sunset provision was intended to put pressure on health care providers to adopt an EHR more quickly, while limiting the potential for unacceptable long-term remuneration ties between the donors and the recipients.

However, many have complained that the sunset provision occurs too early in the EHR implementation process. Beginning in 2010, as part of the regulations associated with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), the Medicare and Medicaid EHR Incentive Programs began to provide financial incentives for the “meaningful use” of certified EHR technology to improve patient care. To receive an EHR incentive payment, providers must show that they are “meaningfully using” their EHRs by meeting thresholds for a number of objectives. The health care provider implements the EHR in stages, consisting of three steps with increasing requirements. All providers begin participating by meeting the Stage 1 requirements for a 90-day period in their first year of meaningful use and a full year in their second year of meaningful use. After meeting the Stage 1 requirements, providers will then have to meet Stage 2 requirements for two full years. The Medicare EHR Incentive program allows eligible providers and eligible hospitals until 2015 to adopt and implement EHR technology before Medicare penalties are levied for non-compliance. However, the sunset date for the Stark EHR exception predates this deadline, a problem as the allowance for EHR donations under the exception has been an impetus for physicians to buy into more integrated electronic health record programs.

As the sunset date nears, there is a growing opposition lobbying for Congress to make the exceptions permanent, or at least extend the date to correspond with the EHR Incentive Program requirements. On February 22, 2013, the Health Information Management Systems Society (HIMSS) published a letter to the Centers for Medicare and Medicaid Services that “strongly recommends removing the Sunset Provision and making the EHR Donation Rules a permanent exception.” HIMSS requested that this extension be implemented as soon as possible to prevent potential disruption of EHR programs at the end of this year. While the extension is a real possibility, hospitals that hope to use the exception as a route to increased physician participation in its EHR should act immediately in order to take advantage of the quickly closing opportunity to provide these benefits to physician groups.

Date: April 2013

Sunset on the Horizon - The Impending Expiration of the Stark EHR Exceptions

Sunset on the Horizon: The Impending Expiration of the Stark EHR Exceptions The development of electronic health records has been a primary priority of American healthcare for the past several years. However, the costs of the development and implement of such systems can be prohibitive, particularly for smaller physician group practices. As a result, the government regulators created incentives to encourage and accelerate the implementation process. This has come in the form of financial subsidies as well as exceptions to the fraud and abuse laws. But the coordination of these incentives does not appear to have been well-planned, leading to a rapidly approaching deadline at the end of the year in which some of the fraud and abuse exceptions will expire prior to the full implementation of programs the government subsidies are meant to stimulate.

There are three exceptions to the Stark Law related to the provision of electronic information systems, prescribing systems, and health records to recipients (usually physician group practices) by donors (usually hospitals). One exception applies to the provision of community-wide health information systems, and two exceptions, created with the Medicare Modernization Act of 2003 and implemented on August 8, 2006, specifically apply to the donation of these electronic services to physicians who have a relationship with the hospital. One exception is for the provision of electronic prescribing items and services, and the other for electronic health records items and services (“EHR”). The Anti-Kickback Statute has safe harbors that roughly parallel these exceptions.

The EHR exception goes beyond electronic prescription information and extends more generally to electronic health records, defined to mean “a repository of consumer health status information in computer-processable form used for clinical diagnosis and treatment for a broad array of clinical conditions.” This exception applies to non-monetary remuneration (consisting of items and services in the form of software or information technology and training services) “necessary and used predominantly” to create, maintain, transmit, or receive EHR, provided thirteen specific conditions are satisfied, the most notable being that a recipient must pay 15% of the donor’s cost for the EHR items and services.

A sunset date (deadline) of December 31, 2013 was established for the CMS Stark exceptions and Anti-Kickback safe harbors for electronic prescribing and EHRs (the community- wide health information system exception does not expire). The sunset provision was intended to put pressure on health care providers to adopt an EHR more quickly, while limiting the potential for unacceptable long-term remuneration ties between the donors and the recipients.

However, many have complained that the sunset provision occurs too early in the EHR implementation process. Beginning in 2010, as part of the regulations associated with the Health Information Technology for Economic and Clinical Health Act (HITECH Act), the Medicare and Medicaid EHR Incentive Programs began to provide financial incentives for the “meaningful use” of certified EHR technology to improve patient care. To receive an EHR incentive payment, providers must show that they are “meaningfully using” their EHRs by meeting thresholds for a number of objectives. The health care provider implements the EHR in stages, consisting of three steps with increasing requirements. All providers begin participating by meeting the Stage 1 requirements for a 90-day period in their first year of meaningful use and a full year in their second year of meaningful use. After meeting the Stage 1 requirements, providers will then have to meet Stage 2 requirements for two full years. The Medicare EHR Incentive program allows eligible providers and eligible hospitals until 2015 to adopt and implement EHR technology before Medicare penalties are levied for non-compliance. However, the sunset date for the Stark EHR exception predates this deadline, a problem as the allowance for EHR donations under the exception has been an impetus for physicians to buy into more integrated electronic health record programs.

As the sunset date nears, there is a growing opposition lobbying for Congress to make the exceptions permanent, or at least extend the date to correspond with the EHR Incentive Program requirements. On February 22, 2013, the Health Information Management Systems Society (HIMSS) published a letter to the Centers for Medicare and Medicaid Services that “strongly recommends removing the Sunset Provision and making the EHR Donation Rules a permanent exception.” HIMSS requested that this extension be implemented as soon as possible to prevent potential disruption of EHR programs at the end of this year. While the extension is a real possibility, hospitals that hope to use the exception as a route to increased physician participation in its EHR should act immediately in order to take advantage of the quickly closing opportunity to provide these benefits to physician groups.