Blog Post

Just in Time - EHR Stark Law Exception, Anti-Kickback Safe Harbor Extended Through December 31, 2021


Hospitals and health systems that have been donating electronic health records (EHRs) to eligible providers under the provisions of the Stark law exception and Anti-Kickback Statute (AKS) safe harbor can breathe a sigh of relief. On December 27, 2013, the U.S. Department of Health & Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), and the Office of Inspector General (OIG) published the final rules (here and here) to extend the expiration date for the protected donations.

The amended exception and safe harbor will continue to permit hospitals and other “donors” to make payments up to 85% of the cost of acquiring and maintaining certain EHR technology and services through December 31, 2021 (aligning with the Medicaid Meaningful Use incentive payment schedule time frame from the HITECH Act).


Organizations that have been providing EHRs under a donation strategy can continue doing so. Those not involved in EHR donation arrangements have an opportunity to establish a strategy that meets the defined regulatory criteria.

For those organizations that are currently leveraging the safe harbor provisions and decide to extend the subsidy arrangements, it is imperative that the following steps be taken immediately:

  • Review and amend current contracts as appropriate to address any restrictions to the subsidy extensions (i.e., allow for subsidies beyond December 31, 2013) and modifications to the donation requirements
  • Verify that the donated EHR software has been certified in accordance with the current edition criteria published by the Office of the National Coordinator for Health Information Technology (ONC)

Besides extending the donation timeline, the final rule:

  • Excludes laboratory companies from the scope of protected donors
  • Updates the criteria under which EHR software is deemed interoperable
  • Removes the electronic prescribing capability requirement
  • Clarifies the conditions that prohibit a donor from limiting or restricting the use, compatibility, or interoperability of donated items or services

The EHR exception and safe harbor sunset extensions went into effect as of December 31, 2013. The other provisions will become effective on March 27, 2014 (90 days after the final rules were published in the Federal Register) and are discussed in further detail below.

Scope of Protected Donors

In the final rules, CMS and OIG addressed concerns about the misuse of the exception and safe harbor provisions resulting in data and referral lock-in between the donor and the referral source. Specifically, CMS and OIG discussed the potential for laboratory companies (which typically do not have front-line patient care responsibilities) to make abusive donations, with the objective of securing future business rather than better coordinating patient care. Therefore, CMS and OIG excluded laboratory companies from the types of entities that may donate EHR technology and services under the final rules. Otherwise, the universe of protected donors remains the same, including hospitals, group practices, prescription drug plan sponsors, and Medicare Advantage organizations.

Interoperability Deeming Provision

The exception and safe harbor provisions still require that donated software be “interoperable” at the time it is provided to a physician. Under the original provisions; however, software was considered interoperable if a certifying body recognized by the HHS Secretary had certified the software no more than 12 months prior to the donation date. Under the final rules, software is deemed interoperable if, on the date it is donated to the physician, it meets ONC certification requirements identified in the then applicable 45 CFR part 170 (i.e., the HITECH Act’s definition of “Certified EHR”). This will require that software “is as interoperable as feasible given the prevailing state of technology at the time the items or services are provided to the physician recipient.” Therefore, the final rules require that donated software be certified to the editions that are adopted and not yet retired by the ONC through its certification program. For example, under the HITECH Act’s definition of “Certified EHR,” in 2013, either the 2011 or 2014 editions would be considered certified technology; in 2014, only the 2014 edition would be considered certified.

Electronic Prescribing Provision

CMS and OIG were satisfied that there are other existing policy drivers, many of which did not exist when the exception and safe harbor were initially promulgated in August 2006, to sufficiently support the adoption of electronic prescribing capabilities. Therefore, under the final rules, an EHR will no longer be required to have electronic prescribing capability in order to be eligible for subsidization.

Data Lock-In and Exchange

CMS and OIG did not adopt significant new requirements or modifications to the rules that would prevent EHR donations that result in data or referral lock-in (i.e., limiting accessibility of the data, resulting in a physician recipient being more likely to utilize or refer to only the donor’s services to ensure the necessary information is easily available). However, the final rules clarify the requirements that in order to qualify for the protection of the exception (and safe harbor), the donor “does not take any action to limit or restrict the use, compatibility, or interoperability of the items or services with other electronic prescribing or electronic health records systems.” Therefore, donated EHRs must be interoperable with other EHRs, health information exchanges, and other forms of technology. For example, a donor and physician recipient may not prevent or inhibit a competitor or non-recipient provider from interfacing with a donated EHR.

With the uncertainties around the extensions to the exceptions and safe harbor provisions settled, hospitals and health systems can continue leveraging the ability to donate technology as part of an overall integration strategy with community physicians.

ECG’s Michelle Holmes has a detailed analysis on what hospital executives need to think about now that the rules have been finalized. Along with David Schoolcraft from the law firm of Ogden Murphy Wallace, Michelle will be presenting on “Using Stark/Anti-Kickback to Support Hospital/Physician IT Alignment Strategies” at the upcoming HIMSS 2014 annual conference. We look forward to seeing you there.