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Management of Pathology Practices
State Guidance Limits EHR Donations

Author: Leigh Polk, McKesson Revenue Management Solutions
Posted: 21 May 2013
Copyright: (c) 2013, PathologyOutlines.com, Inc.

In an effort designed specifically to promote the development, implementation and utilization of electronic health record (EHR) systems, in 2006 the Centers for Medicare & Medicaid (CMS) and the Office of Inspector General (OIG) announced the creation of new Stark exceptions and anti-kickback safe harbors, permitting certain "suppliers" (including laboratories) to donate information technology used predominantly to create, maintain, transmit or receive EHR. This can include software applications, internet connectivity, and training and help desk support services -- but not hardware. The exception requires the costs associated with the donation to be documented, and 15% of the laboratories' costs must be contributed by the recipient.

Over the past three years, the College of American Pathologists (CAP) and state medical societies have been successful in securing state guidance and opinion letters that limit or forbid clinical laboratory EHR donations in seven states. Excerpts from those letters are listed below.

Tennessee: On March 4, the Tennessee Attorney General stated in an opinion letter: "This provision would prohibit a licensed medical laboratory from making any monetary donation to a physician to cover the cost of software designed to manage the physician's electronic health records (EHR) when the physician's office that receives the EHR donation either continues an existing referral arrangement with the donating laboratory or subsequently initiates an arrangement for referral of specimens to the donating laboratory for analysis."

Washington: On Nov. 20, 2012 Washington Attorney General stated in an opinion letter: "A clinical laboratory's donating money to a physician to be used for a portion of the cost of an electronic health record, when the donations are made only to those physicians who maintain or create arrangements for the physician's referral of specimens to the laboratory, would violate the anti-rebate provisions in RCW 19.68.010."

West Virginia: On July 9, 2012 West Virginia Board of Medicine stated in an opinion letter: "If a complaint were to be filed at this office against a medical doctor for receiving a monetary donation to cover 85% of the cost of the physician's electronic health record when the recipient physician either continues a referral arrangement with the laboratory, or subsequently initiates an arrangement for the referral of specimens to the donating laboratory for analysis, then it would be evident that West Virginia Code 30-3-14(c) (6) had been violated."

Pennsylvania: On Aug. 18, 2011 Pennsylvania Deputy Secretary Health Planning and Assessment stated in an opinion letter: "The Department does not wish to hinder the implementations of EHR systems in physician offices unnecessarily. However, we fully expect the donation of EHR systems to be compliant with Federal law, including the Federal Safe Harbor provisions, and state law, as applicable. Section 5.71 is not violated simply by making the donation. Instead, that section would be violated only when the donation in question is made by the laboratory to the physician in order for the laboratory to obtain more business from the physician in question."

Missouri: On June 14, 2011 Missouri Assistant Attorney General stated in an opinion letter: "Where the health care involves a government medical care program, such as MO HealthNet, the provisions of 191.905 apply. These would operate to prohibit a clinical laboratory from offering to pay a physician money (a kickback or rebate) if the physician orders more clinical services (health care) from that laboratory."

New Jersey: On March 16, 2011 New Jersey Clinical Laboratory Improvement Service stated in an opinion letter: "Included in the activities prohibited by the new rules is the donation of electronic health or electronic medical record (EMR) systems by laboratories to physician offices in which the laboratory operates or is seeking to operate a collection station."

New York: On Sept. 27, 2010 Deputy Commissioner Office of Health Information Technology stated in an opinion letter: "NYS rules do not allow cost sharing; therefore, provision of EHR, software and training that otherwise may be permitted under federal law is prohibited in connection with a laboratory's operating in NYS."

This CMS safe harbor, which allows the donation of up to 85% of the EHR cost by permissible donors, is currently set to expire on December 31, 2013. However, CMS and OIG are proposing to extend the legislation to Dec. 31, 2016 or 2021 and are considering excluding laboratories from the list of eligible EHR donors.

To view the complete letters please visit the CAP's State Advocacy section of their website.

Leigh Polk
Business Support Services Director, Pathology and Laboratory
McKesson Revenue Management Solutions


PSA, now part of McKesson, specializes in pathology and clinical laboratory billing, marketing, and business support services. For questions related to this topic or to learn more, please click here or contact Leigh Polk at 1-800-832-5270 ext. 2941 or Leigh.Polk@McKesson.com.

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