United States: MS And OIG Issue Proposed Rules Modifying The Stark Exception And Anti-Kickback Safe Harbor For Donation Of EHR

On April 10, 2013, the Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General of the U.S. Department of Health and Human Services (OIG) each published proposed rules in the Federal Register (Proposed Rules) designed to modify requirements of the Stark Law exception and the Anti-Kickback Safe Harbor related to the donation of electronic health records (EHRs). In the Proposed Rules, CMS proposes to modify the exception to the Stark Self-Referral Law (42 USC § 1395nn), which is set forth in 42 CFR § 411.357(w) for Electronic Health Records Items and Services, and OIG proposes to modify the safe harbor regulation to the federal Anti-Kickback Statute (42 USC § 1320a-7b(b)) which is set forth in 42 CFR § 1001.952(g). Currently, the EHR Stark exception and the Anti-Kickback Safe Harbor permit hospitals and certain other entities to provide or donate certain technology-related items and services for EHRs, which normally would violate the Stark and Anti-Kickback rules. This exception/safe harbor is set to expire on December 13, 2013. The current EHR Stark exception and the Anti-Kickback Safe Harbor also include certain interoperability and electronic prescribing requirements that CMS and OIG propose to modify as well.

Summary of Proposed Rules

While acting under different authority, CMS and OIG effectively propose the same modifications: CMS to the EHR Stark Law exception and OIG to the Anti-Kickback Safe Harbor. There are three proposed changes to each.

The changes to both the EHR Stark Law exception and Anti-Kickback Safe Harbor for donation of EHR items and services propose:

  • To extend the sunset date of the Stark Law exception and Anti-Kickback Safe Harbor from December 31, 2013 to December 31, 2016
  • To modify how EHRs are deemed to be interoperable
  • To eliminate the current requirement that an EHR must contain electronic prescribing to be qualified for the Stark Law exception and the Anti-Kickback Safe Harbor

CMS and OIG both also request comments on revising three other provisions of the EHR Stark Law exception and the Anti-Kickback Safe Harbor. The three provisions on which both CMS and OIG seek comments are:

  • Whether the sunset provision should be extended through December 31, 2021 rather than December 31, 2016, as set forth in the Proposed Rules
  • Whether the donors of EHR items or services protected under the Stark Law exception and Anti-Kickback Safe Harbor should be revised to include only hospitals, group practices, prescription drug plan sponsors, and Medicare Advantage plans and no longer be available to other potential donors, such as laboratories and DME suppliers
  • Whether the Stark Law exception and Anti-Kickback Safe Harbor should be revised to encourage the free exchange of data and to prevent misuse of the exception in a way to lock in referrals

Further Discussion

Extension of Sunset. The existing EHR Stark Law exception and Anti-Kickback Safe Harbor, issued in August 2006, both provide that the exception or safe harbor would sunset and would no longer be available to protect donations of EHR items or services after December 31, 2013. CMS' and OIG's original rationale behind the sunset provision was that the need for protection of donations of EHR items and services would substantially diminish over time as the use of technology became a standard and accepted part of medical practice.

While noting that electronic health technology has expanded dramatically since the initial EHR Stark Law exception and Anti-Kickback Safe Harbor were adopted, CMS and OIG both note in the Proposed Rules that "use of such technology has not yet been universally adopted nationwide" and that further expansion remains a governmental goal. CMS and OIG do not propose to eliminate the sunset date entirely because both agencies continue to believe that when such technology is further embraced, as well as with the availability of Medicare and Medicaid incentive payments, protection for the donation of EHR items or services will no longer be needed. Rather, the Proposed Rules extend the date through December 31, 2016. Such date was selected because it corresponds with the last year in which one may receive a Medicare incentive payment and the last year in which one may initiate a Medicaid EHR incentive payment.

Both CMS and OIG also specifically request comment as to whether the sunset date should be extended to a date later than December 31, 2016. They suggest a possible alternative date would be December 31, 2021, which is the end of the Medicaid EHR incentive payment.

Deeming Interoperability. Both the EHR Stark Law exception and the Anti-Kickback Safe Harbor require that the donated software be interoperable at the time it is provided to the recipient if the donation is to qualify for protection under both exceptions.

The interoperability requirement was intended to ensure that the recipient of the EHR donation was not limited or locked in to only utilizing the EHR with the donor entity. Rather, it was to ensure that the recipient of an EHR donation could use the EHR items or services broadly, including with competitors of the donor who may be using different information technology systems.

The Proposed Rules do not change the requirement for interoperability; they change how interoperability is to be assessed. Currently the Stark Law exception and the Anti-Kickback Safe Harbor provide that "software is deemed to be interoperable" if a certifying body recognized by the Secretary of the U.S. Department of Health and Human Services "has certified the software no more than 12 months prior to the date it is donated." The Proposed Rules change the certifying entity from one recognized by the Secretary to one that has been authorized through a specified process, and remove the 12-month requirement. The Proposed Rules rely on an authorization process of the Offices of the National Coordinator for Health Information Technology (ONC). An entity or body must complete the ONC authorization process in order to be recognized as a certifying body.

The Proposed Rules also modify requirement that software be certified no more than 12-months prior to the date of the donation. ONC has developed a regulatory process for adopting certification standards, which is anticipated to occur on two-year intervals. The Proposed Rules provide that the software is eligible for being deemed interoperable if, on the date it is provided to the recipient, it has been certified to any edition of the EHR certification criteria identified in the then-applicable definition of Certified EHR Technology, found in 45 CFR Part 170. This will allow a determination on interoperability to be based on the prevailing state of technology at the time the item or service is provided to the recipient, rather than in the past 12 months.

Elimination of Request to Include Electronic Prescribing. The current EHR Stark Law exception and Anti-Kickback Safe Harbor provide that the software must contain electronic prescribing capability (42 CFR § 411.357(w)(11) and 42 CFR § 1001.952(y)(10)). While CMS and OIG continue to believe electronic prescribing is critically important, they have concluded in the Proposed Rules that it is not necessary to include that capability in the EHR Stark Law exception and the Anti-Kickback Safe Harbor.

CMS and OIG came to this conclusion based on U.S. Congress' authorization of incentive payments for electronic prescribing in the Medicare Improvements for Patients and Providers Act of 2008, which occurred after the adoption of the Stark Law exception and Anti-Kickback Safe Harbor. Additionally, in the Health Information Technology for Economic and Clinical Health (HITECH Act) of 2009, Congress expanded the EHR incentive program and required eligible professionals under Medicare and Medicaid EHR incentive programs to demonstrate meaningful use, including the use of electronic prescribing. Moreover, CMS and OIG have noted that the industry has rapidly expanded the use of electronic prescribing.

In light of all these provisions, CMS and OIG have concluded and proposed that the existing EHR Stark Law exception and Anti-Kickback Safe Harbor should no longer include the capability for electronic prescribing request.

Comments Sought on Additional Changes

In addition to seeking comments on extending the delay of the sunset provision to December 31, 2021 (as mentioned above), CMS and OIG also seek comment on two other potential changes.

The first relates to the class of donors of EHR items and services that should be eligible for the protection. Currently, the rules do not limit the scope of potential donors. CMS and OIG have concerns about potential abuse by particular types of donors, who do not have a direct and primary patient care relationship and a central role in the health care delivery system. They are considering limiting potential donors to cover only donors mandated by statute — namely, hospitals, group practices, prescription drug plans, and Medicare Advantage organizations. Notably, those excluded from that definition would include laboratories, durable medical equipment suppliers, home care providers, and other ancillary providers.

CMS and OIG seek public comment on this issue before they offer a proposed change.

The second issue on which CMS and OIG seek public comment is the inclusion of additional protection to limit donors from attempts to lock in referrals from recipients of EHR donations and to ensure free exchange of records. As noted above, the interoperability requirement was included for this purpose; the EHR software is required to be interoperable so that it can be used with competitors' technology and not be limited to use with the donor's system. CMS and OIG have noted, however, that even when software is interoperable, certain policies, procedures, and practices have been used by donors to limit the practical ability of records to be freely exchanged across organizations and vendor businesses.

CMS and OIG seek comment on what additional protections, if any, should be included to guard against such limiting activities.


The Proposed Rules are subject to public comment through June 10, 2013. If finalized, the Proposed Rules will make practical revisions to the EHR Stark Law exception and Anti-Kickback Safe Harbor for donations of EHR items and services.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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