United States: CMS And OIG Issue Final Regulations To Extend The Stark Exception And Anti-Kickback Statute Safe Harbor For EHR Donations

On December 27, 2013, the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services' Office of Inspector General (OIG) finalized amendments to the Physician Self-Referral Law (Stark) and Anti-Kickback Statute regulations (the Regulations) regarding the donations of electronic health records (EHR) systems. Among other important changes, CMS and the OIG extended the Regulations, which were originally scheduled to "sunset" on December 31, 2013, to December 31, 2021. The December 31, 2021 date was selected to coincide with the final year of the Medicaid EHR Incentive Program. News of the extension comes as a relief to providers and suppliers who would have otherwise been required to terminate or restructure their EHR subsidy programs. The extension of the sunset period became effective on December 31, 2013; all other changes to the Regulations will be effective on March 27, 2014.

Since their adoption in 2006, the Regulations have enabled hospitals and other providers and suppliers to subsidize up to 85 percent of the costs of EHR software and/or information technology and training services that are necessary and used "predominately" to create, maintain, transmit or receive electronic health records. The Stark exception, which is located at 42 C.F.R. 411.357(w), and the Anti-Kickback Statute safe harbor, which is located at 42 C.F.R. 1001.952(y), are virtually identical.

In addition to extending the expiration date from December 31, 2013 to December 31, 2021, the Regulations made several other changes and clarifications.

Exclusion of Laboratory Companies

Laboratory companies are no longer eligible to subsidize EHR systems due to concerns that some laboratories were explicitly or implicitly conditioning donations of EHR systems on the receipt of referrals from physicians. Commenters complained that such quid pro quo donations were increasing prices for laboratory services and impacting patient care. The decision to exclude laboratory companies from the universe of potential donors is consistent with some state laws and Attorney General Opinions that have prohibited or restricted laboratories from donating EHR systems. Laboratories that are currently engaged in EHR donation programs should take steps to end their donation programs by the March 27, 2014 deadline or restructure them to comply with Stark and the Anti-Kickback Statute. Other ancillary suppliers (e.g., durable medical equipment companies) are still permitted to make donations under the Regulations.

Modifications to Deemed Interoperability

Under the existing Regulations, the EHR technology is required to be "interoperable" at the time it is provided to the recipient. An EHR system will now be deemed "interoperable" if, on the date that it is provided to the recipient, it has been certified by a certifying body recognized by the Office of the National Coordinator (ONC) to an edition of the EHR certification criteria identified in the then applicable 45 C.F.R. part 170. CMS noted that the ONC's certification criteria are implemented through a public process and, therefore, "affords the best opportunity for interested parties to comment on, understand, and ultimately implement those criteria and standards."

E-Prescribing Capability No Longer Required

The EHR system is no longer required to have e-prescribing functionality. CMS and the OIG concluded there was sufficient incentive apart from the Regulations to motivate physicians to use e-prescribing software, and that they do not want to require technology that may be redundant of other e-prescribing software that physicians may have.

Prohibition On Data and Referral "Lock-In"

CMS and the OIG added clarifying language to the Regulations to emphasize that donating entities cannot take any action that restricts the use, compatibility or interoperability of the donated items and services. CMS and the OIG received comments that some donating entities were reaching agreements with physicians that required physicians to refer patients only to the donating entities. Other donating entities reportedly charged high fees for interfaces that would allow competing entities to connect with the EHR, effectively preventing physicians from working with other providers.

No Additional Guidance on Covered Technology

The existing Regulations offer some guidance regarding what technology may be donated, however commenters requested more explicit guidance about eligible technology. CMS and the OIG declined to further clarify what technology would be eligible for donation and, instead, noted that "whether specific items or services fall within the scope of covered technology under the exception ... depends on the exact items or services that are being donated." CMS and the OIG emphasized that the Regulations do not protect monetary remuneration or donations of hardware or items with core functionality other than EHR.


The extension of the Regulations to December 31, 2021 is welcome news for those (non-laboratory) providers and suppliers that wish to maintain their existing EHR donation programs or commence new programs. Together with the financial incentives offered under the Medicare and Medicaid EHR Incentive Programs, the Regulations should facilitate the continued adoption of EHR systems for some time.

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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