Final Regulations to Extend the Stark Exception and Anti-Kickback Statute

The Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services’ Office of Inspector General (OIG) finalized amendments to the Physician Self-Referral Law (Stark) and Anti-Kickback Statute regulations (the Regulations) on December 27, 2013, regarding the donation of electronic health records (EHR) systems. Among other important changes, CMS and the OIG extended the Regulations, which were originally scheduled to “sunset” on December 31, 2013, to December 31, 2021.

The extension of the sunset period became effective December 31, 2013; all other changes to the Regulations will be effective on March 27, 2014.

Since their adoption in 2006, the Regulations have enabled hospitals and other providers and suppliers to subsidize up to 85 percent of the costs of EHR software and/or information technology and training services that are necessary and used “predominately” to create, maintain, transmit or receive electronic health records.

Key changes and clarifications in the Regulations include:

•        Extension of Regulations to December 31, 2021. The December 31, 2021 date was selected to coincide with the final year of the Medicaid EHR Incentive Program. News of the extension comes as a relief to providers and suppliers who would have otherwise been required to terminate or restructure their EHR subsidy programs. 
•         Exclusion of Laboratory Companies. Laboratory companies are no longer eligible to subsidize EHR systems due to concerns that some laboratories were explicitly or implicitly conditioning donations of EHR systems on the receipt of referrals from physicians. Laboratories that are currently engaged in EHR donation programs should take steps to end their donation programs by the March 27, 2014 deadline or restructure them to comply with Stark and the Anti-Kickback Statute.
•         Modifications to Deemed Interoperability. Under the existing Regulations, the EHR technology is required to be “interoperable” at the time it is provided to the recipient. An EHR system will now be deemed “interoperable” if, on the date that it is provided to the recipient, it has been certified by a certifying body recognized by the Office of the National Coordinator (ONC) to an edition of the EHR certification criteria identified in the then applicable 45 C.F.R. part 170. 
•         E-Prescribing Capability No Longer Required. The EHR system is no longer required to have e-prescribing functionality. 
•         Prohibition On Data and Referral “Lock-In.” CMS and the OIG added clarifying language to the Regulations to emphasize that donating entities cannot take any action that restricts the use, compatibility or interoperability of the donated items and services. 

The extension of the Regulations to December 31, 2021 is welcome news for those (non-laboratory) providers and suppliers that wish to maintain their existing EHR donation programs or commence new programs. Together with the financial incentives offered under the Medicare and Medicaid EHR Incentive Programs, the Regulations should facilitate the continued adoption of EHR systems for some time.