New HHS rules ease restrictions on IT giveaways

The plan would let hospitals and group practices give physicians e-prescribing hardware and software or electronic medical record technology with a prescription component.

By David Glendinning — Posted Oct. 24, 2005

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Washington -- For many doctors who see Medicare patients, getting free electronic medical record technology from a partner in health care would break a couple of federal laws. But that soon could change, now that the government has proposed new ways to get around these statutory barriers.

Two Health and Human Services agencies -- the Centers for Medicare & Medicaid Services and the Office of Inspector General -- recently unveiled proposed health IT rules aimed at increasing physicians' use of such technology. Taken together, the regulations would change the Medicare statute to permit hospitals, group practices, Medicare drug plans and Medicare managed care organizations to donate certain types of technology to doctors without running afoul of physician self-referral and kickback prohibitions.

Currently, doctors who would like to take advantage of technology offered by such groups face a dilemma. They can accept the gift and risk federal sanctions by continuing to refer Medicare patients to the donating partner, or they can avoid the appearance of an improper financial relationship by paying fair market price for the IT products.

Doctors shouldn't have to make a choice between these less-than-ideal options, said CMS Administrator Mark McClellan, MD, PhD. "Restrictions on relationships between physicians and other health care entities are very important for assuring that Medicare dollars are spent appropriately, but they were never intended to stand in the way of bringing effective electronic health care to patients," he said. "We are bringing our rules in line with what we are working together to achieve -- an interoperable electronic health care system that benefits patients by improving care, reducing complications and unnecessary tests and procedures."

David Brailer, MD, PhD, the national coordinator for health information technology, said crafting appropriate exceptions to self-referral prohibitions, also known as Stark laws, and anti-kickback measures would remove some of the most daunting challenges to health IT adoption facing individual physicians and small practices.

"We know that one of the principal barriers that exists in the adoption of electronic health records is the ability of small practices to afford them," he said. "We know the second barrier that exists is the technical know-how of smaller practices. These [exceptions] do speak to these two principal barriers."

Under the CMS and OIG rules, physicians could accept certain donations of e-prescribing hardware and software or electronic medical record technology that has a prescription drug component. The protections also would apply to free technical support from the donating entity. The agencies will review recommendations during a 60-day comment period, then they will promulgate final rules.

Physicians hopeful

The changes would be great news to doctors who desperately want to take hospitals up on IT offers but aren't eligible for existing exemptions in the rules that would let them do so, said Ryan G. Bosch, MD, director of the general internal medicine division at George Washington University's Medical Faculty Associates. Physicians in solo and small practices with ties to a hospital or large practice finally would be able to enjoy some of the best technological perks now available only to doctors who are actually employed by the entity, he said.

"Physicians in our community would be helped immensely by access to these medical records, even if it's just the archives," Dr. Bosch said. "Unfortunately, we as a large practice are not able to be philanthropic because it makes it look like we're trying to court referrals."

Group practices and hospitals across the country would consider IT donations an investment, since they would share in any savings that accrue to the system as a result, he said.

Since installing an EMR system more than four years ago, physicians at the nonprofit Medical Faculty Associates have seen a remarkable reduction in paperwork and are now starting to realize the health quality benefits of going digital, Dr. Bosch said. HHS Secretary Michael Leavitt visited the facility to see a demonstration of the system, after which he said that GW had "realized the promise of health IT."

The AMA is hopeful that more doctors can realize this promise through changes in the federal statute, but the group is holding off on weighing in on the regulation's details.

"The American Medical Association supports legislative and regulatory changes that provide an exception to laws that prohibit financial assistance to physicians purchasing health information technology," said AMA Trustee Joseph Heyman, MD. "The new HHS proposed regulations may reduce barriers to HIT implementation in physician offices, and the AMA plans to carefully review the regulations."

Dr. Brailer declined to put an estimated dollar figure on the amount of donated technology that would open up to doctors due to the regulations. But the CMS rule suggests that about 2% of physicians each year would end up accepting roughly $6,000 worth of e-prescribing and EMR technology, bringing total donations up to about $36 million per year.

Bigger picture issues

Despite this potential for constructive financial benefits, federal officials said they would tread a fine line in crafting the final Medicare exemptions. The Stark laws and anti-kickback statutes exist to ensure that hospitals and health plans don't forge financial arrangements that inappropriately enrich themselves at the taxpayers' expense, Leavitt said.

"If the final rule enables that, we will have failed," he said. "But we have every intention of finding the balance and believe that commenters will help us find that balance."

The department will attempt to limit the circumstances under which IT donations can be made -- as well as what form such exchanges can take. Physicians, for example, cannot accept technology or support that is equivalent to products that they already own. Medicare officials also are considering placing a monetary cap on the size of any single donation.

When the federal government's work on health IT has progressed to the point at which it can approve national standards for certifying the technology, it will require that any donations using a Medicare exemption consist of certified products. In such a way, HHS can pursue electronic medical record interoperability as well as widespread adoption, Leavitt said.

Both issues were front and center at the recent inaugural meeting of the HHS-led American Health Information Community, a public-private collaborative that will spend the next several years recommending ways to migrate from paper to digital patient records. The department used the opportunity to announce that it has signed its first three contracts with the private firms that will develop certification standards for EMRs.

As the community continues its work, it must realize that harmonizing health information and getting it into the hands of medical professionals are intertwined priorities, Leavitt said.

"Adoption and interoperability have something in common," he said. "Alone, they have some worth, but together, their value compounds. Our challenge is to find that pathway in which we can move both adoption and interoperability together so that we can tap that value."

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A helping hand

Proposed federal regulations would allow certain entities to give health IT to physicians without violating Medicare self-referral and kickback prohibitions. Potential donors include:

  • Hospitals (to members of their medical staffs)
  • Group practices (to physician members)
  • Medicare prescription drug plans
  • Medicare Advantage managed care organizations

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What's allowed

HHS has proposed limiting the types of free technology Medicare physicians can receive under the planned federal safe harbors. The donated health IT:

  • May consist of items and services that are used solely to transmit and receive electronic prescription drug information.
  • May include e-prescribing hardware, software, Internet connectivity, and training and support services.
  • May include software and training used solely to transmit and receive electronic medical records as long as it includes an electronic prescribing component.
  • May not be technically or functionally equivalent to items and services the physician already has.
  • Might be subject to a cap on face value.

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