Blog Post

HIMSS 2014 Reveals Mixed Plans for EHR Donation Arrangements


Last week I partnered with David Schoolcraft, J.D., of Ogden Murphy Wallace to facilitate a discussion at the 2014 National HIMSS Conference regarding EHR donation arrangements. As you may have seen in a previous blog post, hospitals’ ability to donate EHRs to physician practices was recently extended through the end of 2021. Dave and I addressed the potential of donating an EHR and related services as part of a broader physician alignment strategy.

Audience polling during the session revealed that the vast majority of attendees (80%) either had no EHR donation plans or were only considering participating in such an arrangement. The rest of the audience either had existing plans to move forward with offering/receiving a subsidy or were already doing so. Such results are not necessarily indicative of national hospital and physician practice trends, but they do make me wonder whether the extension of the Stark law exception and Anti-Kickback Statute safe harbor was really that important. Will this option be more widely adopted now as compared to when it was first made available in late 2005? Only time will tell, but we certainly hope so; an EHR donation can be a viable mode of strengthening the hospital/physician relationship in environments where exclusion arrangements are not possible.

Those attendees who did have experience with an EHR donation arrangement reported that system governance and support was by far the most complicated part of setting it up. Audience members with less experience agreed that this is a significant area of consideration but were more concerned with the process of selecting participants and the criteria to determine recipient eligibility for the EHR donation. A common misconception is that hospitals are required to extend the same offering to all community physicians, or at least all of those with hospital privileges. Dave explained that this is not in fact the case – hospitals actually have quite a bit of flexibility in this matter. The audience additionally indicated that cost allocation methodologies are complex and deserve attention.

I commented during the session that much of the policy around EHR donations centers on the purposeful (and documented) intent to provide community benefit. The “R word” (referrals) cannot be mentioned in the context of EHR donations. To that end, either the audience members were fearful of regulators waiting in the wings or were sincere in their polling response that coordinated care was the primary outcome they realized or hoped to achieve from participating in an EHR donation arrangement. In fact, 75% of the responders agreed coordinated care is the measure of success; smaller proportions indicated a desire to gain a competitive advantage (17%) or accrue positive financial outcomes (8%).

Although you can review the slides from our presentation online courtesy of HIMSS, they do not include some of the thoughtful questions – and answers – that were addressed at the end of the session. Here are a few of them if you were not able to attend:

Q: Can hospitals donate an EHR to a practice that has a system in place that is being replaced?

A: Yes, as long as the hospital and practice can show that the newly implemented EHR offers enhanced features and functionality (because “comparable” technology cannot be donated).

Q: How much should a hospital charge for items such as network connectivity, hardware, and desktop support that cannot be donated according to the regulations?

A: A hospital should charge for those items based on fair market value, considering the hospital’s costs as well as what the practice would pay in the market for a similar product or service.

Q: Can a hospital provide HIE connectivity for free, or can it only donate up to 85% of the cost of the HIE?

A: A hospital can provide HIE access to a physician practice at no cost if the HIE functionality is dedicated to use in connection with hospital services for hospital patients (e.g., orders and results). HIE functionality that offers stand-alone use or value to the practice may be provided under the “EHR Donation Exception,” with the hospital covering up to 85% of the costs. HIE functionality may also be implemented without charge to the practice under the lesser known “Community-Wide Health Information System Exception,” as long as the functionality is available under the same terms to all providers in the community who wish to participate.

For the five key lessons related to a Stark law-compliant EHR donation arrangement as presented by Dave and me, visit Ogden Murphy Wallace’s blog.