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  • Health Information Technology Exceptions to the Physician Self-Referral Law

    The physician self-referral (“Stark”) law prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship (ownership interest or compensation arrangement), unless an exception applies. In 2006, Medicare finalized two health information technology-related exceptions to the Stark Law.

    What Do the Two Exceptions Permit?

    1. Certain entities can provide physicians with e-prescribing hardware, software, or information technology and training services necessary and used solely to receive and transmit electronic prescription information. Protected donors and recipients include: 1) hospitals to members of their medical staffs; 2) group practices to physician members; 3) prescription drug plan sponsors and Medicare Advantage organizations to prescribing physicians.
    2. Entities that furnish designated health services can provide physicians with electronic health record (EHR) software and information technology and training services necessary and used predominantly to create, maintain, transmit, or receive EHRs, provided that certain conditions and requirements are satisfied (see below).  

    What Are the Requirements and Conditions of the EHR Exception?

    • Protects arrangements involving non-monetary remuneration in the form of EHR software and information technology and training services that are necessary and used predominantly to create, maintain, transmit, or receive EHRs (provided all conditions of the exception are satisfied). Hardware is not included in the exception.
    • While protected EHR information technology can serve additional purposes, EHR purposes must predominate; the provision of any technology used primarily to conduct personal business or business unrelated to the physician’s practice is prohibited. Thus, depending on the circumstances, software that relates to patient admission, scheduling functions, billing, and clinical support can be donated.
    • EHR software must be interoperable to qualify for protection. Software is considered interoperable if a certifying body recognized by the Secretary of HHS has certified the software no more than 12 months prior to the date it is provided to the physician. Moreover, the donor (or any agent of the donor) should not disable the interoperability of the EHR software or impose barriers to the compatibility of the donated technology with other technology. A list of EHR products certified by the Certification Commission for Health Information Technology is available.
    • Software must contain e-prescribing capability (either in an e-prescribing component or the ability to interface with the physician’s existing e-prescribing system) which complies with the applicable standards under Medicare Part D at the time the items and services are donated.
    • Entities that furnish designated health services may make protected donations to their physicians.
    • Donors should select physicians for receipt of EHR technology using means that do not directly take into account the volume or value of referrals from the physician or other business generated between the parties.
    • The final rule does not limit the aggregate value of technology that may qualify for protection. However, it does contain a requirement that physician recipients pay 15% of the donor’s costs. The donor may not finance the physician recipient’s payment or loan funds to the physician recipient for use by the physician recipient to pay for the items and services.
    • Donors’ costs must be documented in the written agreement between the parties.  While the final rule does not require physicians to certify that they do not already possess equivalent technology, it does preclude protection if the donor knows that the physician already has equivalent technology (or acts in deliberate ignorance or reckless disregard of that fact).
    • The EHR exception sunsets on December 31, 2013. 


    Please e-mail IDSA staff or call 703-299-5146 if you have any questions related to these exceptions.

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