The electronic health record (EHR) donation program could be a powerful tool for hospitals and health systems to facilitate improved information sharing across the care continuum and support population health management.

But the program, which permits a hospital or health system (and a few others) to “donate” up to 85% of the cost of a practice office’s electronic health record (EHR) system to community physicians without running afoul of Stark and anti-kickback statues, currently expires on December 31, 2013.

This near-term expiration date has acted as a barrier for many hospitals or health systems, deterring them from starting an EHR donation program to support their community physicians in acquiring an EHR. 

On April 10, CMS published a Notice of Proposed Rulemaking that proposes to extend the deadline for the Stark exception until December 31, 2016. This would provide interested hospitals or health systems with the ability to support their community physicians in acquiring suitable EHR technology and permit the community physician to receive payments under the EHR incentive program, otherwise known as demonstrating Meaningful Use.  The Office of the Inspector General has published a companion Notice of Proposed Rulemaking covering the anti-kickback statute safe harbor.

At this stage, this is only a proposed rule. There is a sixty-day comment period (ending June 10, 2013), after which we are likely to see a final rule, making the deadline extension official. Given the simplicity of the change, it will likely not require extensive delay before the final rule is published.

For hospitals or health systems contemplating a program to support community physicians in acquiring practice office EHRs, this is good news. Proactive hospitals or health systems may wish to restart planning for their EHR donation programs now to enable a rapid rollout.

Yes, the rule isn’t final and the key provisions of the final rule may differ. However, given the simplicity of the change, this risk is relatively low. Hospitals and health systems that begin planning now based on the proposed rule will have considerable competitive advantage.

The EHR incentive program also provides greater incentives for earlier demonstrations of Meaningful Use—2013 is the benchmark year for Medicare penalties, commencing in 2015 (though organizations may also avoid the penalty by demonstrating Meaningful Use in early 2014). A hospital or health system that has its EHR donation program operational sooner may start accruing benefits immediately.

A secondary benefit of the proposed deadline extension is that those hospitals or health systems that have an existing EHR donation program would be permitted to continue to cover up to 85% of annual operating costs through 2016, deferring the price shock to recipient physicians who otherwise would have been required to assume 100% of this burden come 2014. Existing agreements between hospitals or health systems may need to be revised to take this potential extension into account.

For more information, please contact Gerard Nussbaum:

212.508.8371
gerard.nussbaum@kurtsalmon.com

10 April 2013