[Federal Register Volume 78, Number 249 (Friday, December 27, 2013)]
[Rules and Regulations]
[Pages 78751-78769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-30923]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Part 411
[CMS-1454-F]
RIN 0938-AR70
Medicare Program; Physicians' Referrals to Health Care Entities
With Which They Have Financial Relationships: Exception for Certain
Electronic Health Records Arrangements
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Final rule.
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SUMMARY: This final rule revises the exception to the physician self-
referral law that permits certain arrangements involving the donation
of electronic health records items and services. Specifically, this
final rule extends the expiration date of the exception to December 31,
2021, excludes laboratory companies from the types of entities that may
donate electronic health records items and services, updates the
provision under which electronic health records software is deemed
interoperable, removes the electronic prescribing capability
requirement, and clarifies the requirement prohibiting any action that
limits or restricts the use, compatibility, or interoperability of
donated items or services.
DATES: With the exception of the amendment to Sec. 411.357(w)(13),
this regulation is effective on March 27, 2014. The amendment to Sec.
411.357(w)(13) is effective on December 31, 2013.
FOR FURTHER INFORMATION CONTACT: Lisa Ohrin, (410) 786-8852.
SUPPLEMENTARY INFORMATION:
I. Executive Summary
A. Purpose of the Regulatory Action
Section 1877 of the Social Security Act (the Act), codified at 42
U.S.C. 1395nn, also known as the physician self-referral statute: (1)
prohibits a physician from making referrals for certain designated
health services (DHS) 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 the
requirements of an exception are satisfied; and (2) prohibits the
entity from submitting claims to Medicare for those referred services,
unless the requirements of an
[[Page 78752]]
exception are satisfied. The statute establishes a number of exceptions
and grants the Secretary the authority to create additional regulatory
exceptions for financial relationships that do not pose a risk of
program or patient abuse. Since the original enactment of the statute
in 1989, we have published a series of final rules interpreting the
statute and promulgating numerous exceptions.
In accordance with our statutory authority, we published an
exception to the physician self-referral law to protect certain
arrangements involving the provision of interoperable electronic health
records software or information technology and training services. The
final rule for this exception was published on August 8, 2006 (71 FR
45140) (hereinafter referred to as the August 2006 final rule) and is
scheduled to expire on December 31, 2013 (see 42 CFR 411.357(w)(13)).
In the April 10, 2013 Federal Register (78 FR 21308), we published a
proposed rule that would update certain aspects of the electronic
health records exception and extend the expiration date of the
exception. The purpose of this final rule is to address the public
comments received on the proposed rule and to finalize certain aspects
of the proposed rule.
B. Summary of the Final Rule
This final rule amends the current exception in several ways.
First, this final rule extends the expiration date of the exception to
December 31, 2021. Second, it excludes laboratory companies from the
types of entities that may donate electronic health records items and
services. Third, this rule updates the provision under which electronic
health records software is deemed interoperable. Fourth, this rule
clarifies the requirement at Sec. 411.357(w)(3) prohibiting any action
that limits or restricts the use, compatibility, or interoperability of
donated items or services. Finally, it removes from the exception the
requirement related to electronic prescribing capability.
C. Costs and Benefits
This final rule modifies an existing exception to the physician
self-referral law. The exception permits certain entities to provide to
physicians certain software and information technology and training and
services necessary and used predominantly to create, maintain,
transmit, or receive electronic health records. The modifications to
the exception do not impose new requirements on any party. This is not
a major rule, as defined at 5 U.S.C. 804(2). It is also not
economically significant, because it will not have a significant effect
on program expenditures and there are no additional substantive costs
to implement the resulting provisions. We expect the exception, as
modified by this final rule, to continue to facilitate the adoption of
electronic health records technology.
II. Background
A. Physician Self-Referral Statute and Exceptions
Section 1877 of the Act, codified at 42 U.S.C. 1395nn, also known
as the physician self-referral statute: (1) prohibits a physician from
making referrals for certain DHS 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
the requirements of an exception are satisfied; and (2) prohibits the
entity from submitting claims to Medicare for those referred services,
unless the requirements of an exception are satisfied. The statute at
42 U.S.C. 1395nn(b)(4) establishes a number of exceptions and grants
the Secretary the authority to create additional regulatory exceptions
for financial relationships that do not pose a risk of program or
patient abuse. Since the original enactment of the statute in 1989, we
have published a series of final rules interpreting the statute and
promulgating numerous exceptions.
B. The Electronic Health Records Items and Services Exception
On August 8, 2006 (71 FR 45140), we published a final rule that,
among other things, finalized at Sec. 411.357(w) an exception to the
physician self-referral law for protecting certain arrangements
involving interoperable electronic health records software or
information technology and training services (the ``electronic health
records exception''). Also in the August 8, 2006 Federal Register (71
FR 45110), the Department of Health and Human Services' (HHS) Office of
Inspector General (OIG) published similar final regulations at Sec.
1001.952 that, among other things, adopted a safe harbor under the
Federal anti-kickback statute (section 1128B(b) of the Act, codified at
42 U.S.C. 1320a-7b(b)) for certain arrangements involving interoperable
electronic health records software or information technology and
training services. As set forth at Sec. 411.357(w)(13) and Sec.
1001.952(y)(13), the physician self-referral law electronic health
records exception and the Federal anti-kickback electronic health
records safe harbor, respectively, are scheduled to expire on December
31, 2013.
On April 10, 2013 (78 FR 21308), we published a proposed rule that
would set forth certain proposed changes to the electronic health
records exception. First, we proposed to update the provision under
which electronic health records software is deemed interoperable.
Second, we proposed to remove from the exception the requirement
related to electronic prescribing capability. Third, we proposed to
extend the expiration date of the exception. In addition to these
proposals, we solicited public comment on other possible amendments to
the exception, including our proposal to limit the types of entities
that may donate electronic health records items and services under the
exception and to add or modify conditions to limit the risk of data and
referral lock-in. Elsewhere in the same issue of the Federal Register
(78 FR 21314), OIG proposed almost identical changes to the Federal
anti-kickback statute safe harbor. Within the limitations imposed by
the differences in the respective underlying statutes, we attempted to
ensure as much consistency as possible between our proposed
modifications to the exception at Sec. 411.357(w) and OIG's proposed
modifications to the safe harbor. We noted in the proposed rule that,
due to the close nexus between our proposed rule and the OIG's proposed
rule, we might consider comments submitted in response to OIG's
proposal in finalizing this rule.
This final rule adopts some of the proposed changes to the
electronic health records exception to the physician self-referral law.
First, this final rule extends the expiration date of the exception to
December 31, 2021. Second, it excludes laboratory companies from the
types of entities that may donate electronic health records items and
services under the exception. Third, this rule updates the provision
under which electronic health records software is deemed interoperable.
Fourth, this rule clarifies the requirement at Sec. 411.357(w)(3)
prohibiting any action that limits or restricts the use, compatibility,
or interoperability of donated items or services. Finally, it removes
from the exception the requirement related to electronic prescribing
capability.
Elsewhere in this issue of the Federal Register, the OIG is
finalizing almost identical changes to the electronic health records
safe harbor \1\ under the Federal anti-kickback statute. We attempted
to ensure as much
[[Page 78753]]
consistency as possible between our changes to the physician self-
referral law exception and OIG's safe harbor changes. We have
considered and responded to the timely comments we received as well as
those received by OIG. Similarly, OIG considered comments submitted in
response to our proposed rule in crafting its final rule. For purposes
of this final rule, we treat comments that were made with respect to
the Federal anti-kickback statute as if they had been made with respect
to the physician self-referral law, except where they relate to
differences in the underlying statutes.
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\1\ 42 CFR 1001.952(y).
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III. Provisions of the Proposed Regulations and Analysis of and
Responses to Public Comments
We received approximately 110 timely items of correspondence for
the proposed rule. We summarize and respond to comments later in this
section of the final rule. For ease of reference, we divided the
comments and responses into the following categories: the deeming
provision; the electronic prescribing provision; the ``sunset''
provision; and additional proposals and considerations.
A. The Deeming Provision
Our current electronic health records exception requires at Sec.
411.357(w)(2) that the donated software must be ``interoperable'' (as
defined at Sec. 411.351) at the time it is provided to the physician.
This provision further provides that software is deemed to be
interoperable if a certifying body recognized by the Secretary has
certified the software no more than 12 months prior to the date it is
provided to the physician. We proposed two modifications to Sec.
411.357(w)(2), which is known as the ``deeming provision.'' Both
modifications to the deeming provision were proposed to reflect recent
developments in the Office of the National Coordinator for Health
Information Technology's (ONC) certification program.
The first proposed modification would reflect ONC's responsibility
for authorizing certifying bodies. The second would modify the
timeframe during which donated software must be certified. Currently,
to comply with the deeming provision, the exception requires donated
software to be certified no more than 12 months prior to the date of
donation.
After the issuance of the August 2006 final rule, ONC developed a
regulatory process for adopting certification criteria and standards
which is anticipated to result in a cyclical rulemaking process. (For
more information, see ONC's September 4, 2012 final rule entitled
``Health Information Technology: Standards, Implementation
Specifications, and Certification Criteria for Electronic Health Record
Technology, 2014 Edition; Revisions to the Permanent Certification
Program for Health Information Technology'' (77 FR 54163).) Our
proposal would have modified the deeming provision to track ONC's
anticipated regulatory cycle. As a result, software would be eligible
for deeming if, on the date it is provided to the physician, it has
been certified to any edition of the electronic health record
certification criteria that is identified in the then-applicable
definition of Certified EHR Technology in 45 CFR part 170. By way of
example, for 2013, the applicable definition of Certified EHR
Technology includes both the 2011 and the 2014 editions of the
electronic health record certification criteria. Therefore, in 2013,
software certified to meet either the 2011 edition or the 2014 edition
would have satisfied the requirement of the exception as we proposed to
modify it. Additionally, we solicited comments on whether removing the
current 12-month certification requirement would impact donations and
whether we should retain the 12-month certification period as an
additional means of determining eligibility under the deeming
provision.
After consideration of the public comments received, we are
finalizing the proposed revisions to Sec. 411.357(w)(2) with one
clarification to our proposed regulatory text to ensure that the
deeming provision closely tracks ONC's certification program. We are
revising Sec. 411.357(w)(2) to state that software is deemed to be
interoperable if, on the date that it is provided to the physician, it
has been certified by a certifying body authorized by the National
Coordinator for Health Information Technology to an edition of the
electronic health record certification criteria identified in the then-
applicable 45 CFR part 170. As we stated in the August 2006 final rule
(71 FR 45156), we understand ``that the ability of software to be
interoperable is evolving as technology develops. In assessing whether
software is interoperable, we believe the appropriate inquiry is
whether the 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.'' We believe that our final rule
with respect to this requirement is consistent with that understanding
and our objective of ensuring that software is certified to the current
required standard of interoperability when it is donated.
Comment: All of the commenters that addressed this issue in their
comments supported the proposed modification that would amend the
exception to recognize ONC as the agency responsible for authorizing
certifying bodies on behalf of the Secretary, with one commenter
requesting that we clarify that software need not be certified to ONC's
standards to be eligible for donation.
Response: We appreciate the commenters' support for this
modification. With respect to the request for clarification, the
commenter is correct that Sec. 411.357(w)(2) does not require software
to be certified to ONC's standards in order to be eligible for
donation. As we discussed in the August 2006 final rule (71 FR 45156),
the deeming provision offers one way for parties to be certain that the
interoperability requirement of Sec. 411.357(w)(2) is met at the time
of donation. Even if donated software is not deemed to be
interoperable, the arrangement would satisfy the interoperability
requirement of the exception if the software meets the definition of
``interoperable'' at Sec. 411.351.
Comment: One commenter expressed concerns about linking the
interoperability requirement of the exception to ONC's certification
criteria and standards because they do not, in the commenter's
assessment, reflect contemporary views of interoperability. The
commenter suggested that we instead implement a broad definition of
interoperability adopted by the International Organization for
Standardization or, alternatively, that we adopt interoperability
functional definitions developed by the American National Standards
Institute.
Response: Although we are mindful that other non-governmental
organizations may be developing their own standards to encourage the
adoption of interoperable electronic health records technology, ONC's
certification criteria and standards are the core policies the
Department is utilizing to accelerate and advance interoperability and
health information exchange. On March 7, 2013, ONC and CMS jointly
published a Request for Information (78 FR 14793) to solicit public
feedback on a set of possible policies ``that would encourage providers
to routinely exchange health information through interoperable systems
in support of care coordination across health care settings.'' The
process by which ONC considers the implementation of new certification
[[Page 78754]]
criteria and standards is a public, transparent effort that allows the
Department's electronic health records technology experts to consider
appropriately the comments submitted in light of the goal ``to
accelerate the existing progress and enhance a market environment that
will accelerate [health information exchange] across providers. . . .''
(78 FR 14795).
We believe that it is reasonable and appropriate to link the
deeming provision to ONC's certification criteria and standards because
of ONC's expertise and its public process for considering and
implementing its criteria and standards. ONC is the agency within the
Department with expertise in determining the relevant criteria and
standards to ensure that software is as interoperable as feasible given
the prevailing state of technology. ONC expects to revise and expand
such criteria and standards incrementally over time to support greater
interoperability of electronic health records technology. (See the
September 4, 2012 final rule (77 FR 54269).) Additionally, we believe
that utilizing ONC's certification criteria and standards, which are
implemented through a public process, affords the best opportunity for
interested parties to comment on, understand, and ultimately implement
those criteria and standards. Therefore, we are not adopting the
commenter's suggestion.
Comment: One commenter stated that many electronic health records
systems lack the capabilities to function within a patient-centered
medical home. The commenter suggested that we finalize policies that
further strengthen the use of core electronic health records features.
Response: We are not adopting the commenter's suggestion. As
discussed, ONC is the agency within the Department with expertise in
determining the relevant criteria and standards for electronic health
records technology, including those related to the use of core
features. The public process through which ONC's certification criteria
and standards are implemented affords the best opportunity for
interested parties to comment on, understand, and ultimately implement
those criteria and standards.
Comment: Of the commenters that addressed the deeming provision,
most supported our proposal to modify the timeframe within which
donated software must have been certified to track more closely the
current ONC certification program. Commenters asserted that aligning
the exception's certification timeframe with ONC's certification
program will provide donors and physician recipients more certainty
about the deemed status of donated software because the software must
be certified to meet only one set of standards on the same
certification cycle to comply with both ONC's certification criteria
and the deeming provision of the exception. One commenter supported the
modification, but suggested that the 12-month certification timeframe
also be retained or, alternatively, that we allow software to be deemed
to be interoperable if it has been certified to any edition of ONC's
electronic health record certification criteria.
Response: We agree that aligning the exception's certification
timeframe with ONC's certification program provides more certainty to
donors and physician recipients. We believe that the modification we
are making to the requirement at Sec. 411.357(w)(2) will support the
dual goals of the deeming provision: (1) to ensure that donated
software is as interoperable as feasible given the prevailing state of
technology at the time it is provided to the physician recipient; and
(2) to provide donors and physician recipients a means to have
certainty that donated software satisfies the interoperability
requirement of the exception.
We are not persuaded to adopt the commenter's suggestion to retain
the 12-month certification timeframe, as this would not ensure that
software is certified to the current required standard of
interoperability. In the course of evaluating the commenter's
suggestion, however, we realized that our proposed regulatory text may
be too narrow to satisfy the dual goals of the deeming provision. Under
our proposed regulatory text, software would be deemed interoperable if
it was certified to an edition \2\ of certification criteria referenced
in the then-applicable definition of ``Certified EHR Technology'' at 45
CFR 170.102. That definition applies only to the Medicare and Medicaid
Electronic Health Record Incentive Programs (the EHR Incentive
Programs). See generally, 42 CFR part 495. However, ONC also has the
authority to adopt into its regulations in 45 CFR part 170
certification criteria for health information technology, including
electronic health records, that may not be referenced in the definition
of ``Certified EHR Technology'' because they are not related to the EHR
Incentive Programs. If we finalize the proposed regulatory text,
software certified to criteria in editions not included in the
definition ``Certified EHR Technology'' would not be eligible for
deeming under the exception. Further, we have recently learned that ONC
intends to retire outdated editions of certification criteria by
removing them from the regulatory text in 45 CFR part 170. Accordingly,
software certified to an edition identified in the regulations in
effect on the date of the donation would be certified to a then-
applicable edition, regardless of whether the particular edition was
also referenced in the then-applicable definition of Certified EHR
Technology. Thus, we are finalizing revisions to Sec. 411.357(w)(2) to
track more closely ONC's certification program in the deeming
provision. We are finalizing a modification to our regulatory text to
provide that software is deemed to be interoperable if, on the date it
is provided to the physician recipient, it has been certified by a
certifying body authorized by the National Coordinator for Health
Information Technology to an edition of the electronic health record
certification criteria identified in the then-applicable version of 45
CFR part 170. We believe that this is consistent with our intent, as
articulated in the proposed rule, to modify the deeming provision by
removing the 12-month timeframe and substituting a provision that more
closely tracks ONC's certification program. Further, we believe that
the regulatory text, as modified, will support the goals of the deeming
provision described previously.
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\2\ ONC has recently begun characterizing sets of adopted
certification criteria as ``editions.''
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Comment: One commenter suggested that, for deeming purposes, we
should require that software be certified to the latest edition of
electronic health record certification criteria rather than any edition
then applicable. This commenter also suggested that the electronic
directory of service (e-DOS) standard should be a certification
requirement for donated software, and asserted that both
recommendations would help ensure electronic health records software is
interoperable.
Response: We decline to adopt the commenter's suggested
requirements for the exception at Sec. 411.357(w). We believe that
requiring donated software to be certified to editions that are adopted
and not yet retired by ONC through its certification program ensures
that the software is certified to interoperability standards updated
regularly by the agency of the Department with the relevant expertise.
Further, adding requirements to the ONC certification criteria and
standards is outside the scope of this rulemaking. Therefore, we are
not implementing the commenter's suggestions.
[[Page 78755]]
B. The Electronic Prescribing Provision
At Sec. 411.357(w)(11), our current electronic health records
exception specifies that the donated software must ``contain []
electronic prescribing capability, either through an electronic
prescribing component or the ability to interface with the physician's
existing electronic prescribing system that meets the applicable
standards under Medicare Part D at the time the items and services are
provided.'' In the preamble to the August 2006 final rule (71 FR
45153), we stated that we included ``this requirement, in part, because
of the critical importance of electronic prescribing in producing the
overall benefits of health information technology, as evidenced by
section 101 of the [Medicare Prescription Drug, Improvement, and
Modernization Act of 2003 (MMA), Pub. L. 108-173].'' We also noted that
it was ``our understanding that most electronic health records systems
already include an electronic prescribing component'' (71 FR 45153).
We continue to believe in the critical importance of electronic
prescribing. However, in light of developments since the August 2006
final rule, we proposed to delete from the exception the requirement at
Sec. 411.357(w)(11). Based on our review of the public comments and
for the reasons stated in the proposed rule, we are finalizing our
proposal to eliminate the requirement that electronic health records
software contain electronic prescribing capability in order to qualify
for protection under the exception at Sec. 411.357(w).
Comment: Two commenters disagreed that it is no longer necessary to
require the inclusion of electronic prescribing capability in donated
electronic health records software. One of the commenters stated that
it was encouraged by the growth in the number of physicians using
electronic prescribing between 2008 and 2012, but believed that the
requirement should remain for patient safety reasons because electronic
prescribing is critical to lowering the incidences of preventable
medication errors.
Response: Like the commenters, and as we stated in the proposed
rule (78 FR 21311), we believe in the importance of electronic
prescribing. However, we are persuaded that other existing policy
drivers, many of which did not exist in August 2006 when the exception
was promulgated, sufficiently support the adoption of electronic
prescribing capabilities. We do not want to undermine important public
policy goals by requiring redundant and sometimes expensive software
capabilities that may not contribute to the interoperability of a given
system. As we discussed in the proposed rule, electronic prescribing
technology will remain eligible for donation under the electronic
health records exception or under the electronic prescribing exception
at Sec. 411.357(v). We do not believe that removing this requirement
would increase the risk of fraud or abuse posed by donations made
pursuant to the exception.
Comment: Many commenters supported our proposal to eliminate the
requirement that donated software must include electronic prescribing
capability at the time it is provided to the physician recipient,
agreeing that developments since the promulgation of the exception make
it unnecessary to retain this requirement. One of the commenters
asserted that the goal of the requirement for the inclusion of
electronic prescribing technology in donated electronic health records
software--that is, increasing the use of electronic prescribing--had
been achieved through the electronic prescribing incentive program
authorized by the Medicare Improvements for Patients and Providers Act
of 2008.
Response: We appreciate the commenters' support and, for the
reasons explained in more detail previously in this final rule, we are
eliminating the requirement at Sec. 411.357(w)(11) that donated
electronic health records software must contain electronic prescribing
capability, either through an electronic prescribing component or the
ability to interface with the physician's existing electronic
prescribing system that meets the applicable standards under Medicare
Part D at the time the items and services are provided.
C. The ``Sunset'' Provision
Protected donations under the current electronic health records
exception must be made on or prior to December 31, 2013. In adopting
this requirement of the electronic health records exception, we
acknowledged in the August 2006 final rule (71 FR 45162), ``that the
need for donations of electronic health records technology should
diminish substantially over time as the use of such technology becomes
a standard and expected part of medical practice.''
As we discussed in the proposed rule, although the industry has
made great progress in the adoption and meaningful use of electronic
health records technology, the use of such technology has not yet been
adopted nationwide. Continued use and further adoption of electronic
health records technology remains an important goal of the Department.
We continue to believe that, as progress on this goal is achieved, the
need for an exception for donations of electronic health records items
and services should continue to diminish over time. Accordingly, we
proposed to extend the expiration date of the exception to December 31,
2016, selecting this date for the reasons described in the proposed
rule (78 FR 21311). We also specifically sought comment on whether we
should, as an alternative, select a later expiration date and what that
date should be. For example, we stated that we were considering an
expiration date of December 31, 2021 (78 FR 21311). In response to
comments, we are extending the expiration date of the exception to
December 31, 2021.
Comment: Numerous commenters urged us to make permanent the
exception at Sec. 411.357(w). According to these commenters, a
permanent exception could: (1) provide certainty with respect to the
cost of electronic health records technology for physicians; (2)
encourage adoption by physicians who are new entrants into medical
practice or have postponed adoption based on financial concerns
regarding the ongoing costs of maintaining and supporting an electronic
health records system; (3) encourage adoption by providers and
suppliers that are not eligible for incentive payments through the
Medicare and Medicaid programs; and (4) preserve the gains already made
in the adoption of interoperable electronic health records technology,
especially where hospitals have invested in health information
technology infrastructure through protected donations of such
technology. According to some commenters, although the exception was
implemented to encourage the adoption of health information technology,
it is now a necessity for the creation of new health care delivery and
payment models. Some commenters also stated their support for a
permanent exception because the adoption of electronic health records
technology has been slower than expected, and allowing the exception to
expire in 2016 would adversely affect the rate of adoption. Some of
these commenters requested that, if CMS is not inclined to make the
exception permanent, we extend the availability of the exception
through the latest date noted in the proposed rule--December 31, 2021.
Response: We agree with the commenters that the continued
availability of the exception at Sec. 411.357(w) plays a part in
achieving
[[Page 78756]]
the Department's goal of promoting electronic health records technology
adoption. However, we do not believe that making the exception
permanent is required or appropriate at this time. The permanent
availability of the exception could serve as a disincentive to adopting
interoperable electronic health records technology in the near-term.
Moreover, as described in the proposed rule (78 FR 21312) and elsewhere
in this final rule, we are concerned about inappropriate donations of
electronic health records items and services that lock in data and
referrals between a donor and physician recipient, among other risks. A
permanent exception might exacerbate these risks over the longer term
without significantly improving adoption rates. However, in light of
other modifications we are making in this final rule to mitigate such
ongoing risks, including removing laboratory companies as protected
donors of electronic health records items and services, we are
persuaded to permit use of the exception for more than the additional
3-year period that we proposed.
The adoption of interoperable electronic health records technology
still remains a challenge for some providers and suppliers despite
progress in its implementation and meaningful use since the August 2006
promulgation of the exception at Sec. 411.357(w). (See ONC's Report to
Congress on Health IT Adoption (June 2013) at http://www.healthit.gov/sites/default/files/rtc_adoption_of_healthit_and_relatedefforts.pdf and the U.S. Department of Health and Human Services
Assistant Secretary for Planning and Evaluation's EHR Payment
Incentives for Providers Ineligible for Payment Incentives and Other
Funding Study (June 2013) at http://aspe.hhs.gov/daltcp/reports/2013/ehrpi.shtml.) Although we believe that the protection afforded by the
exception encourages the adoption of such technology, its permanence is
not essential to the achievement of widespread adoption. It is only one
of a number of ways that physicians are incented to adopt electronic
health records technology, including the incentives offered by the EHR
Incentive Programs and the movement in the health care industry toward
the electronic exchange of patient health information as a means to
improve patient care quality and outcomes.
Balancing our desire to encourage further adoption of interoperable
electronic health records technology against our concerns about
potential disincentives to adoption and the misuse of the exception to
lock in referral streams, we are establishing a December 31, 2021
expiration date for the exception. We believe that this expiration date
will support earlier adoption of electronic health records technology,
provide a timeframe that aligns with the financial incentives for
electronic health records adoption currently offered by the Federal
government, and safeguard against foreseeable future fraud risks, while
still providing adequate time for donors and physician recipients to
maximize the financial incentives currently offered by the Federal
government.
Comment: Two commenters agreed that the availability of the
exception at Sec. 411.357(w) should be extended, but not beyond
December 31, 2016. One of these commenters asserted that a relatively
short extension of the sunset date for the exception would allow a
wider range of people to obtain access to health information technology
services while not diminishing the incentive for providers to acquire,
implement and standardize the necessary electronic health records
systems. Another commenter supported our proposal to extend the
availability of the exception through December 31, 2016, and encouraged
us to consider an additional extension as that date approaches. One
commenter suggested that we extend the availability of the exception
for at least 6 years, although a shorter or longer time period could be
established after review of adoption rates across the range of
providers that may or may not be eligible for meaningful use incentives
under the EHR Incentive Programs. Other commenters supported our
alternative proposal to extend the availability of the exception
through December 31, 2021, which corresponds to the statutory end of
the Medicaid incentive program. These commenters noted that more
remains to be done to promote electronic health records technology
adoption, and suggested that maintaining the exception through this
date will help maximize the incentives for eligible physicians to adopt
electronic health records technology and thereby increase use of
electronic health records. Two other commenters suggested tying the
expiration of the exception to the corresponding date for assessing
``penalties'' under the Medicare EHR Incentive Program in order to
align appropriately Federal regulation of electronic health records
technology adoption and use.
Response: We share the commenter's concerns regarding diminishing
incentives for providers to acquire, implement and standardize the
necessary electronic health records systems. However, after
consideration of all of the comments on this issue, we believe that an
extension of the exception would advance the Department's goals
regarding the adoption of interoperable electronic health records
technology and improvements in patient care, while providing an
incentive for providers to adopt electronic health records technology
in the near-term. Therefore, we are extending the availability of the
exception at Sec. 411.357(w) through December 31, 2021, which
corresponds to the end of incentive payments under the Medicaid EHR
Incentive Program.
We note that the two commenters that suggested tying the expiration
of the exception to the corresponding date for assessing penalties
under the Medicare EHR Incentive Program appear to misunderstand the
duration of the downward payment adjustments under this program, which
will continue until an eligible participant adopts and meaningfully
uses appropriate electronic health records technology. (For additional
information, see the July 28, 2010 (75 FR 44448) final rule entitled
``Medicare and Medicaid Programs; Electronic Health Record Incentive
Program.'') The practical effect of the commenters' suggestion would be
to extend permanently the exception at Sec. 411.357(w). For the
reasons stated elsewhere in this final rule, we do not believe that
making the exception permanent is required or appropriate at this time,
and we are not adopting the commenters' suggestion.
Comment: A few commenters expressed general support for extending
the availability of the exception, but did not specify whether the
extension should be for 3 years, 8 years, or some other length of time.
Commenters noted that failure to extend the availability of the
exception would negatively impact the adoption of electronic health
records technology, as well as its continued use.
Response: As described previously, we are finalizing our
alternative proposal to extend the exception through December 31, 2021.
Comment: A number of commenters urged us to let the exception at
Sec. 411.357(w) expire on December 31, 2013. Some of the commenters
asserted that the exception permits the exact behavior the law was
intended to stop, namely, referrals tied to financial relationships
between physicians and entities furnishing DHS, in this case, entities
that donate electronic health records items and services. Other
commenters asserted that the exception permits ``legalized extortion''
or provides ``legal sanction to trample the competition.'' Another
commenter
[[Page 78757]]
asserted that the inclusion of ``non-market factors'' (that is, the
influence of donors, rather than end users) in the decision to adopt
electronic health records technology may result in lower quality
products or services and/or higher costs, often with an adverse impact
on technology adoption and innovation. Still others asserted that,
given the financial incentives that the government itself has provided,
it is no longer necessary to spur the adoption of electronic health
records technology through the underwriting of the cost of electronic
health records technology by outside entities.
Response: Although we appreciate the commenters' concerns, we
continue to believe that the exception serves to advance the adoption
and use of interoperable electronic health records. However, we caution
that a compensation arrangement involving the donation of electronic
health records technology runs afoul of the physician self-referral law
unless it satisfies each requirement of the exception at Sec.
411.357(w). Arrangements that disguise the ``purchase'' or lock-in of
referrals and donations that are solicited by the physician recipient
in exchange for referrals would fail to satisfy the requirements of the
exception. We disagree with the commenters that asserted that
encouragement for the ``underwriting'' of electronic health records
technology by organizations other than the government is no longer
necessary, particularly in light of the developments in integrated
patient care delivery and payment models.
Comment: Numerous commenters suggested that the exception at Sec.
411.357(w) should sunset as scheduled on December 31, 2013, but only
with respect to laboratories and pathology practices, ``ancillary
service providers,'' entities not listed in section 101 of the MMA
(authorizing an exception for certain donations of electronic
prescribing items and services), or entities that are not part of an
accountable care organization or not integrated in a meaningful manner.
Response: We consider these comments to be related to ``protected
donors'' and address them in section III.D.1. of this final rule.
D. Additional Proposals and Considerations
1. Protected Donors
As we discussed in the proposed rule, despite our goal of
expediting the adoption of electronic health records technology, we
have concerns about the potential for abuse of the exception by certain
types of providers and suppliers (including suppliers of ancillary
services that do not have a direct and primary patient care
relationship and a central role in the health care delivery
infrastructure). The OIG indicated that it has concerns related to the
potential for laboratories and other ancillary service providers to
abuse its safe harbor, as it has received comments suggesting that
abusive donations are being made under the electronic health records
safe harbor. In order to address these concerns, we proposed to limit
the scope of protected donors under the electronic health records
exception.
In the proposed rule, we stated that we were considering revising
the exception to cover only the MMA-mandated donors we originally
proposed when the exception was first established: hospitals, group
practices, prescription drug plan sponsors, and Medicare Advantage (MA)
organizations. We stated that we were also considering whether other
individuals or entities with front-line patient care responsibilities
across health care settings, such as safety net providers, should be
included, and, if so, which ones. Alternatively, we stated that we were
considering retaining the current broad scope of protected donors, but
excluding specific types of donors--suppliers of ancillary services
associated with a high risk of fraud and abuse--because donations by
such suppliers may be more likely to be motivated by a purpose of
securing future business than by a purpose of better coordinating care
for beneficiaries across health care settings. In particular, we
discussed excluding laboratory companies from the scope of permissible
donors, as their donations have been the subject of complaints. We also
discussed excluding other high-risk categories of potential donors,
such as durable medical equipment (DME) suppliers and independent home
health agencies. We sought comment on the alternatives under
consideration, including comments (with supporting reasons) regarding
particular types of providers or suppliers that should or should not be
permitted to utilize the exception given its goals.
Many commenters raised concerns about donations of electronic
health records items and services by laboratory companies and strongly
urged us to adopt our proposal to eliminate protection for such
donations, either by excluding laboratory companies from the scope of
protected donors (if we extend the availability of the exception), or
by letting the exception sunset altogether. (For more detailed
discussion of comments concerning the sunset provision, see section
III.C. of this final rule.) Other commenters raised similar concerns,
but did not suggest a particular approach to address them.
We carefully considered the comments that we received on this
proposal and, based on the concerns articulated by commenters and the
wide-ranging support from the entire spectrum of the laboratory
industry (from small, pathologist-owned laboratory companies to a
national laboratory trade association that represents the industry's
largest laboratory companies), we are finalizing our proposal to
exclude laboratory companies from the types of entities that may donate
electronic health records items and services under the exception. We
believe this decision is consistent with and furthers our continued
goal of promoting the adoption of interoperable electronic health
records technology that benefits patient care while reducing the
likelihood that the exception will be misused by donors to secure
referrals. We also believe that our decision will address situations
identified by some of the commenters involving physician recipients
conditioning referrals for laboratory services on the receipt of, or
redirecting referrals for laboratory services following, donations from
laboratory companies.
Comment: Many commenters raised concerns that, notwithstanding a
clear prohibition in the exception, laboratory companies are,
explicitly or implicitly, conditioning donations of electronic health
records items and services on the receipt of referrals from the
physician recipients of those donations or establishing referral quotas
and threatening to require the physician recipient to repay the cost of
the donated items or services if the quotas are not reached. Some
commenters suggested that such quid pro quo donations, and donations by
laboratory companies generally, are having a negative effect on
competition within the laboratory services industry (including
increased prices for laboratory services) and impacting patient care,
as referral decisions are being made based on whether a laboratory
company donated electronic health records items or services, not
whether that company offers the best quality services or turnaround
time. A few commenters also raised concerns that laboratory companies
are targeting potential physician recipients based on the volume or
value of their anticipated referrals.
Response: The current requirement at Sec. 411.357(w)(6) prohibits
determining the eligibility of a physician recipient or the amount or
nature of the items or
[[Page 78758]]
services to be donated in a manner that directly takes into account the
volume or value of referrals or other business generated between the
parties. Accordingly, the quid pro quo arrangements and targeted
donations described by the commenters would not satisfy this
requirement of the exception. Such arrangements are not consistent with
the purpose of the exception and can result in the precise types of
harm the physician self-referral law is designed to prevent, such as
financial self-interest that may affect a physician's medical decision
making. We urge those with information about such arrangements to
contact the OIG's fraud hotline at 1-800-HHS-TIPS or visit https://forms.oig.hhs.gov/hotlineoperations/ to learn of other ways to report
fraud.
We appreciate the commenters' support for our proposal to remove
donations by laboratory companies from the protection of the exception.
We believe that our decision to exclude laboratory companies from the
scope of protected donors is the best way to encourage and facilitate
the adoption of interoperable electronic health records technology
without risk of program or patient abuse.
Comment: Several commenters raised concerns about laboratory
company arrangements with electronic health records technology vendors.
The commenters described agreements involving laboratory companies and
vendors that result in the vendors charging other laboratory companies
high fees to interface with the donated technology or prohibiting other
laboratory companies from purchasing the technology for donation to
their own clients. One of the commenters also raised a concern that
volume discount arrangements between laboratory companies and vendors
of electronic health records technology are resulting in donations of
electronic health records items and services that may not best suit the
needs of the physician recipient. The commenter asserted that donor
laboratory companies are pushing a particular vendor's specific
electronic health records system onto physician recipients because of
the donor's close relationship with the vendor.
Response: Excluding potential competitors of the donor from
interfacing with donated items or services, as described by the
commenters, can result in data and referral lock-in. We discuss the
issue of lock-in elsewhere in this final rule in more detail. We
believe that our determination to exclude laboratory companies from the
scope of protected donors will help address the data and referral lock-
in risks posed by arrangements such as those described by the
commenters. We also believe that the changes to Sec. 411.357(w)(1)
that we are finalizing regarding the types of entities that may donate
electronic health records items and services will help address the
commenter's concern about the negative impact of relationships between
laboratory companies and vendors on the selection of electronic health
records technology by physicians. We stated in the August 2006 final
rule that, although physician recipients remain free to choose any
electronic health records technology that suits their needs, we do not
require donors to facilitate that choice for purposes of the exception.
However, as we also stated in the August 2006 final rule (71 FR 45157),
our regulations require donors to offer interoperable products and
donors must not impede the interoperability of any electronic health
records software they decide to offer. Any agreement between a donor
and a vendor that precludes or limits the ability of competitors to
interface with the donated electronic health records software would
raise significant questions regarding whether the donation meets the
requirement at Sec. 411.357(w)(3).
Comment: Many commenters noted that several states--including
Missouri, New Jersey, New York, Pennsylvania, Tennessee, Washington,
and West Virginia--have prohibited or restricted donations of
electronic health records technology by laboratory companies to address
fraud and abuse concerns. Some of the commenters urged us to effectuate
a similar prohibition or restriction by removing laboratory companies
as potential donors under the exception. One of these commenters
asserted that laboratory companies licensed in states that strictly
prohibit them from donating to referring physicians all or part of the
costs of electronic health records technology are put at a considerable
disadvantage in the marketplace because of ``the need for [electronic
health records technology] subsidies to compete for business.''
Response: We believe that our determination to exclude laboratory
companies from the types of entities that may donate electronic health
records items and services under the exception will address the fraud
and abuse concerns referenced by the commenters. With respect to the
commenter's concern about being disadvantaged, we note that our
decision to prohibit laboratory companies from utilizing the exception
applies equally to all laboratory companies, regardless of their
location.
Comment: Several commenters, including a national laboratory trade
association that represents the industry's largest laboratory
companies, took exception to what they perceived as an allegation that
laboratory companies are solely responsible for problematic donations
of electronic health records items and services. Some of these
commenters asserted that electronic health records technology vendors
are encouraging physicians to seek or demand donations from laboratory
companies, and that physicians are threatening to withhold referrals or
send laboratory business elsewhere if donations are not made. According
to one commenter, because physicians are not paying for a significant
portion of the cost of these items and services, electronic health
records technology vendors are able to charge high prices and the size
of donations (in dollars) has increased exponentially in recent years.
The commenter also suggested that vendors may be manipulating pricing
to maximize the amount a laboratory company pays for donated items and
services while minimizing or eliminating any physician responsibility.
Another commenter raised a related concern that electronic health
records technology vendors have increased the costs of their products
because they know that laboratories are paying for them. Generally,
commenters raising concerns about the conduct of electronic health
records technology vendors and physicians recommended that we remove
laboratory companies from the universe of permissible donors under the
exception.
One commenter asserted that physicians are no longer choosing
electronic health records technology based on which system is most
appropriate, but rather based on which will produce the largest
donation of items and services. Another commenter asserted that many
physicians will change laboratory companies and seek a new donation
once an existing donor laboratory company ceases to subsidize the
physicians' electronic health records technology costs. This commenter
stated that such conversions to different electronic health records
technology are not only inefficient, but undermine the spirit of the
regulatory requirement that physicians do not possess the same or
equivalent items or services as those being donated.
Response: Our proposed modification related to the universe of
donors potentially covered under the exception; thus, the focus of our
discussion in the proposed rule was on donor conduct. Some of the
comments we describe in
[[Page 78759]]
this final rule also raise concerns about the conduct of physician
recipients. In response, we are clarifying that we do not believe that
problematic donations involving laboratory companies are solely the
result of questionable conduct by laboratory companies. We believe that
our decision to exclude laboratory companies from the universe of
protected donors is the best way to reduce the risk of misuse of the
exception at this time and addresses the concerns identified by the
commenters.
We note that Sec. 411.357(w)(5) prohibits the physician recipient
and the physician recipient's practice from making the receipt, amount
or nature of the donated items or services a condition of doing
business with the donor. This provision recognizes the program
integrity risk posed by a potential physician recipient who demands a
donation in exchange for referrals. This type of quid pro quo
arrangement is no less troubling than quid pro quo arrangements that
originate with the donor and would not satisfy the requirements of the
exception. Whether a quid pro quo donation is for an initial
installation of a donated item or service or a conversion to a
different donated item or service would not change our analysis.
Additionally, we caution those engaging in conversion arrangements to
be mindful of the limitations in the exception at Sec. 411.357(w)(8)
concerning the donation of equivalent items or services.
Comment: Several commenters suggested that laboratory companies
should be prohibited from donating electronic health records items and
services to physicians or that physicians should pay for their own
electronic health records technology. Other commenters asserted that
laboratory companies do not share an essential interest in their
referring clients having electronic health records technology. Still
other commenters stated simply that laboratory companies represent a
high risk of fraud and abuse.
Response: Based on the complaints previously received by OIG, which
are described in more detail in the proposed rule, and the information
provided by the commenters regarding some of the arrangements between
laboratory companies and physician recipients of donated electronic
health records items and services, we agree that donations of
electronic health records items and services by laboratory companies
present a high risk of fraud and abuse. Exceptions promulgated using
our authority under section 1877(b)(4) of the Act may provide
protection from the physician self-referral law's prohibitions only for
those financial relationships that pose no risk of program or patient
abuse. We do not believe that continuing to permit laboratory companies
to make protected donations under the exception at Sec. 411.357(w)
would meet this standard. Therefore, we are modifying the requirements
of the exception to eliminate laboratory companies from the types of
entities that may provide donations under the exception. We do not
agree with the commenters that laboratory companies necessarily do not
have an essential interest in their referring clients having electronic
health records technology. It is the behavior of laboratory companies
and physician recipients of donations from laboratory companies of
which we are aware that drives our determination to finalize our
proposal to eliminate laboratory companies from the types of entities
that may provide donations under the exception.
Comment: A few commenters noted that, rather than electronic health
records, laboratory companies typically use a laboratory information
system (LIS), anatomic pathologist information system, and/or blood
banking system to store and share patients' laboratory results, and
that these systems should not be confused with an electronic health
record that includes a patient's full medical record comprised of
information from many medical specialties, including pathology. One of
these commenters asserted that laboratories already bear the cost of
establishing LIS interfaces that they provide to physicians in order to
exchange laboratory services data electronically, and that clinical and
anatomic laboratories could continue to do so legally even if they were
no longer protected donors under the exception. One commenter lamented
the costs associated with interfaces, other commenters requested that
CMS clarify its position on the donation of interfaces by laboratory
companies, and one commenter asserted that interfaces were not
analogous to facsimile machines, which we have stated in the past may
be provided to physicians under certain circumstances.
Response: We appreciate the general information provided by the
commenters regarding the various types of technology that laboratory
companies generally use or do not use. The more relevant technology in
the laboratory setting is the interface that exchanges data
electronically between the laboratory and its referral sources. These
comments provide us an opportunity to discuss more fully our position
on the donation of interfaces by laboratory companies.
Our decision to exclude laboratory companies from the universe of
protected donors under the exception does not affect our interpretation
of the physician self-referral law as it relates to whether the
provision of an item or service qualifies as ``remuneration'' that
establishes a compensation arrangement that implicates the law's
referral and billing prohibitions. In section 1877(h)(1)(A) of the Act,
``compensation arrangement'' is defined as ``any arrangement involving
any remuneration'' between a physician (or an immediate family member
of such physician) and an entity furnishing DHS. Section 1877(h)(1)(B)
of the Act defines ``remuneration'' to include ``any remuneration,
directly or indirectly, in cash or in kind.'' However, under section
1877(h)(1)(C) of the Act, ``remuneration'' does not include ``the
provision of items, devices, or supplies that are used solely to: (i)
collect, transport, process, or store specimens for the entity
providing the item, device, or supply; or (ii) order or communicate the
results of tests or procedures for such entity.'' Therefore, the
provision of such items, devices or supplies does not result in a
compensation arrangement that implicates the physician self-referral
law's referral and billing prohibitions. We discussed this further in
CMS Advisory Opinion 2008-01, which can be found at http://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Downloads/CMS-AO-2008-01.pdf. Accordingly, the provision of certain interfaces, such as those
described by the commenters, need not satisfy the requirements of Sec.
411.357(w).
We disagree with the commenter that asserted that interfaces are
not sufficiently analogous to facsimile machines. We believe that a
limited-use interface (as described previously) is the contemporary
analog to the limited-use computer or facsimile described in the
example from the 1998 proposed rule preamble (63 FR 1693 and 1694
(January 9, 1998)). Moreover, the mode of technology is not restricted
by the language of section 1877(h)(1)(c) of the Act nor is its cost,
which is, in any event, outside the scope of this rulemaking.
Comment: Several commenters inquired whether our proposal to
prohibit use of the exception for donations of electronic health
records items and services by laboratory companies would apply to
suppliers of both anatomic and clinical pathology services, and
suggested that our proposal should apply to both. Commenters also
inquired about the application of this proposal to hospitals
[[Page 78760]]
that operate laboratory companies for non-hospital affiliated
customers. Raising concerns about an uneven playing field, some of
these commenters urged us to exclude such hospitals from the universe
of protected donors if we determined to exclude laboratory companies.
One commenter suggested that we effectuate this limitation by
restricting protected hospital donations to those made to the
hospital's employed physicians and the hospital's wholly-owned
physician practices.
Response: Our proposal applied to ``laboratory companies'' and did
not distinguish between those that provide anatomic pathology services
and those that provide clinical pathology services. We intend that
references to ``laboratory company'' or ``laboratory companies''
include entities that furnish both types of DHS.
With respect to the commenters' suggestion to limit or prohibit
hospital donations of electronic health records items and services, we
appreciate the concerns articulated by the commenters, but are not
adopting their suggestion at this time. We continue to believe that
hospitals have a substantial and central stake in patients' electronic
health records. Further, the types and prevalence of the concerns that
have been brought to the OIG's attention and discussed elsewhere in
this final rule about donations by laboratory companies have not
arisen, to our knowledge, in the hospital-donation context.
We are also clarifying that, if a hospital furnishes clinical
laboratory services through a laboratory that is a department of the
hospital for Medicare purposes (including cost reporting), and the
hospital bills for the services through the hospital's provider number,
then the hospital would not be a ``laboratory company'' and would
continue to qualify as a protected donor under the modified exception.
However, if a hospital-affiliated or hospital-owned company with its
own supplier number furnishes clinical laboratory services that are
billed using a billing number assigned to the company and not to the
hospital, the company would be a ``laboratory company'' and would no
longer qualify as a protected donor. The ability of the affiliated
hospital to avail itself of the exception would be unaffected. We
remind readers that it is the substance, not the form, of an
arrangement that governs under the physician self-referral law.
Comment: One commenter requested that, if we finalize our proposal
to exclude laboratory companies from the universe of protected donors,
we specifically clarify that ``[laboratory companies] are prohibited
from providing [ ] software to physicians unless they comply with
another one of the existing exceptions.'' The commenter went on to cite
examples of software leases and sales at fair market value that could
potentially qualify for protection under an exception other than the
one at Sec. 411.357(w).
Response: We decline the commenter's invitation to make this
clarification. Exceptions set forth specific requirements that, if
satisfied, assure the parties involved that physician referrals to the
entity for DHS are not prohibited and that the entity may bill Medicare
for the services furnished pursuant to those physician referrals. As we
have stated in prior rulemakings, an arrangement need not satisfy the
requirements of a particular exception. Rather, the parties to an
arrangement may avail themselves of any applicable exception to protect
the physician's referrals to the DHS entity with which he or she (or an
immediate family member) has a financial relationship.
Comment: One commenter shared its concerns about a practice that it
described as ``post-donation in-sourcing.'' The commenter stated that
it is aware of situations in which laboratory companies are donating
electronic health records technology to referring physicians only to
have those physicians in-source their laboratory services shortly after
the donation. The commenter suggested that the donations enable
referring physicians to avoid bearing the full cost of electronic
health records technology without continued referrals to the donating
laboratory company.
Response: We are not modifying the exception to address the
commenter's concern. We remind stakeholders that the exception does not
require the physician recipient to make referrals to the donor. To the
contrary, Sec. 411.357(w)(5) prohibits the physician recipient and his
or her practice from making the receipt, amount, or nature of the
donated items or services a condition of doing business with the donor.
Moreover, Sec. 411.357(w)(6) prohibits determining the eligibility of
a physician recipient or the amount or nature of the items or services
to be donated in a manner that directly takes into account the volume
or value of referrals or other business generated between the parties.
Whether protection is afforded under the exception to the types of
arrangements described by the commenter will depend on whether all of
the requirements of the exception are satisfied.
Comment: Two commenters raised issues regarding the type of
remuneration permissible under the exception at Sec. 411.357(w). One
commenter characterized the exception as allowing laboratory companies
to donate funds to physician recipients to help them implement
electronic health records technology. Another commenter noted that some
donations from laboratory companies have included hardware.
Response: We remind stakeholders that the exception at Sec.
411.357(w) applies only to the donation of nonmonetary remuneration (in
the form of software or information technology and training services)
necessary and used predominantly to create, maintain, transmit, or
receive electronic health records. As stated in the preamble to the
August 2006 final rule (71 FR 45161), reimbursement for previously
incurred expenses is not protected, as it poses a substantial risk of
program and patient abuse. We also remind stakeholders that the
exception does not protect the donation of hardware.
Comment: Although the majority of commenters supported excluding
laboratory companies from the types of entities that may donate
electronic health records items and services under the exception, some
commenters made other recommendations related to protected donors. A
number of commenters recommended that we maintain our current scope of
protected donors; that is, allow any entity (as defined at Sec.
411.351) to provide electronic health records items and services to a
physician. Some of these commenters stated that limiting the scope of
protected donors could have an impact on specialists, who, according to
the commenters, still have relatively low rates of electronic health
records adoption. Along the same lines, one commenter stated that
limiting the categories of donors that may seek protection under the
exception will negatively impact physician recipients by preventing
certain entities from helping to move the entire healthcare system
toward more interoperable electronic health record systems. Others
cautioned that restricting the universe of permissible donors will
stymie innovation and restrict learning from the technology. Finally,
some commenters contended that laboratory companies and other ancillary
service providers have a legitimate clinical interest in donating
electronic health records technology and that many physician practices
depend on it.
Some commenters, while acknowledging our concerns regarding abusive
donation practices, suggested
[[Page 78761]]
alternative means to address the concerns we articulated in the
proposed rule. These commenters variously recommended that we
strengthen interoperation requirements, provide physician education
materials, or adopt enforcement policies to prevent abuses rather than
limiting the universe of potential donors of electronic health records
items and services.
Response: We agree with many of the reasons articulated by the
commenters supporting a fully expansive universe of protected donors
under the exception. We recognize that limiting the universe of
potential donors could constrain the ability of many physicians to
adopt electronic health records technology. However, we are persuaded
by the commenters that cited examples or patterns of program abuse by
laboratory companies and are amending the exception to limit
permissible donors under Sec. 411.357(w) by excluding laboratory
companies. Other than with respect to laboratory companies, the
universe of protected donors will remain the same. We will continue to
monitor and may, prior to the end of 2021, reconsider in a future
rulemaking the risk of program or patient abuse relating to the use of
the exception by other donors or categories of donors.
We appreciate the suggestions from commenters regarding alternative
means of addressing abusive donation practices. However, our authority
under section 1877(b)(4) of the Act permits us to establish exceptions
to the physician self-referral law only where protected financial
relationships would pose no risk of program or patient abuse. We do not
believe that adopting the commenters' alternative suggestions for
addressing our concerns would meet this standard.
Comment: We received a number of comments requesting that we retain
certain categories of providers and suppliers within the universe of
permissible donors of electronic health records items and services
under the exception at Sec. 411.357(w). For example, commenters that
provide dialysis services specifically requested that they remain
protected donors. One of the dialysis-provider commenters noted that
excluding this specialty would have a chilling effect on the
development and availability of the specialized electronic health
records systems used by nephrologists. A few commenters requested that
we continue to include hospitals and health systems as protected donors
in order for them to retain the ability to assist physicians in
adopting electronic health records technology. Other commenters
requested that we explicitly retain home health agencies as permissible
donors. In support of retaining home health agencies, one commenter
stated that the depth, breadth, and frequency of communications between
home health agencies and other direct care providers makes the use of
interoperable electronic health records technology essential to
improving clinical outcomes and financial efficiencies. We also
received comments in support of retaining safety net providers and
pharmacies as protected donors.
Response: We agree generally with the thrust of these comments. We
recognize the value of permitting entities that participate directly in
the provision of health care to patients and that have a need to
coordinate with care providers to donate electronic health records
items and services to facilitate those interactions. We take no action
in this final rule to prohibit entities other than laboratory companies
from utilizing the exception.
Comment: Some commenters agreed with the option we presented in the
proposed rule to retain the ability of any DHS entity to donate
electronic health records items and services, except suppliers of
ancillary services associated with a high risk of fraud and abuse. A
few of these commenters suggested that a targeted approach would
minimize the risk of unintended consequences. One of these commenters
asserted that we should exclude the particular individuals or entities
that have been the subject of complaints. Another of these commenters
specifically recommended that we target categories of suppliers with a
history or pattern of abusive behavior.
Other commenters variously recommended excluding laboratories, DME
suppliers, home health agencies, or safety net providers from the types
of entities that may donate electronic health records items and
services under the exception. One commenter asserted that entities like
laboratory companies and DME suppliers do not have an overarching and
essential interest in having physicians use electronic health records,
nor do they coordinate the patient's care. In contrast, one commenter
objected to singling out a provider or supplier type to exclude from
the scope of protected donors. This commenter stated that such an
action unjustly: (1) penalizes a whole category of providers or
suppliers when most, in the commenter's assessment, are law-abiding;
and (2) supports other providers or suppliers that may have similar
motivations.
Response: We respond elsewhere in this final rule to the commenters
who expressly recommended removing only laboratory companies from the
universe of permissible donors. With respect to the other commenters,
we note that, in the proposed rule (78 FR 21312), we specifically
requested comments, ``with supporting reasons,'' regarding whether
particular provider or supplier types should be prohibited from
utilizing the exception at Sec. 411.357(w). Some commenters suggested
that we prohibit other types of entities from donating electronic
health records items and services under the exception, but the comments
did not provide specific examples of abusive practices with respect to
donations of electronic health records items and services by such
donors, nor did the comments indicate problems with other types of
entities comparable to those that are arising in the context of
laboratory companies. Finally, we do not agree with the commenters that
laboratory companies, DME suppliers, home health agencies, safety net
providers, or, for that matter, any other ``ancillary'' service
providers necessarily do not have an overarching and essential interest
in having physicians use electronic health records, or that they do not
coordinate the patient's care. It is the behavior of laboratory
companies and physician recipients of donations from laboratory
companies of which we are aware that drives our determination to
finalize our proposal to exclude laboratory companies from the types of
entities that may provide donations under the exception. We have not
heard the same concerns about other categories of donors or types of
donation arrangements and, therefore, believe it is premature to
exclude potential donors (other than laboratory companies). We also
decline to identify particular individuals or organizations in the
regulation.
Comment: A few commenters recommended restricting the entities that
may donate electronic health records items and services under the
exception to those types listed in the MMA. These commenters also
suggested imposing additional restrictions on donations from this
limited universe of donors. For example, one commenter recommended
limiting the application of the exception to hospitals and providers
operating in an integrated setting and to MA plans and providers under
contract with them. Another commenter suggested limiting the
application of the exception to a similar integration model, and to
hospitals that donate electronic health records items and services to
their employed physicians and the physician groups that they own. In
contrast, one
[[Page 78762]]
commenter suggested that limiting the protected donor types to the
original MMA list would be too restrictive. The commenter believed that
some provider types not listed in the MMA should have the opportunity
to make donations (for example, ambulatory surgical centers that now
perform many procedures previously only performed in hospitals).
Response: We agree that providers and suppliers operating in an
integrated environment need interoperable electronic health records.
However, we do not believe that the need for this technology is limited
to those individuals and entities in an integrated care setting.
Patients may receive care from providers and suppliers that are not in
the same integrated system, and the patient's medical records need to
be shared with those providers and suppliers that also care for the
patient. The Department's goal continues to be fostering broad adoption
of interoperable electronic health records technology. In furtherance
of that goal, we seek to limit the applicability of the exception vis-
[agrave]-vis permissible donors only to the extent necessary to prevent
program and patient abuse. At this time, we believe that excluding
laboratory companies from the types of entities that may utilize the
electronic health records exception, rather than limiting the universe
of permissible donors to the MMA list of donors (or some other subset
of permissible donors) strikes the right balance between furthering the
Department's goal and preventing program and patient abuse.
2. Data Lock-In and Exchange
We solicited comments on what new requirements could be added to,
or how we could modify existing requirements of, the exception at Sec.
411.357(w) in order to achieve our goals of: (1) preventing misuse of
the exception that results in data and referral lock-in; and (2)
encouraging the free exchange of data (in accordance with protections
for privacy). Additionally, we requested comments on whether such
requirements, if any, should be in addition to, or in lieu of, our
proposal to limit the entities whose donations of electronic health
records items and services may qualify for protection under the
exceptions. Finally, we solicited comments on possible modifications to
Sec. 411.357(w)(3), which requires that, in order to qualify for the
protection of the exception, ``[t]he donor (or any person on the
donor's behalf) 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.'' We
solicited these comments to explore whether this requirement could be
modified to reduce the possibility of data and referral lock-in.
Comment: Many commenters asserted that the current requirements of
the exception provide adequate safeguards to prevent donations of
electronic health records items and services that result in data or
referral lock-in between the donor and physician recipient. These
commenters expressed general support for the investigation of
arrangements that may not satisfy the requirements of the exception.
Several of these commenters were also concerned that adding or
modifying requirements may increase the burden of compliance and,
therefore, lead to fewer entities willing to make appropriate donations
of electronic health records items and services.
Response: In general, we agree with these commenters. We are not
persuaded to adopt significant new requirements or modifications to the
exception to address the issue of data or referral lock-in. In
addition, we do not wish to take any action that inadvertently
discourages donors and physician recipients from entering into
appropriate donation arrangements. However, we are making limited
clarifications to Sec. 411.357(w)(3) to reflect our intended meaning
of this requirement and our interpretation of existing requirements for
interoperability as it pertains to potential data or referral lock-in.
We also remain committed to assisting our law enforcement partners in
the investigation of potentially abusive arrangements that purport to
satisfy the requirements of the exception but, in fact, do not.
Comment: Several commenters expressed concerns about donations of
electronic health records items and services that lead to data lock-in.
As described elsewhere in this final rule, some commenters suggested
that, although some donated electronic health records software has the
ability to be interoperable, vendors may charge providers who do not
use the same donated software high fees to interface with it. The
commenters contended that these business practices result in electronic
health records software that is not practically interoperable because
non-donor providers cannot afford to connect to the donated electronic
health records items and services. Other commenters expressed general
concerns that donated electronic health records items or services are
capable of interoperation, but that physician recipients implicitly
agree to send referrals using the technology only to the donor. These
commenters did not provide specific recommendations to modify the data
lock-in requirements of the exception, but generally supported our
efforts to prevent data lock-in.
Two commenters representing laboratory companies expressed specific
concerns about a feature of donated software that may lead to data
lock-in. These commenters explained that some software is designed to
limit the accessibility of data that is received from an electronic
health records system that is different than the donated software. Most
often, data sent from the non-donated electronic health records system
cannot populate automatically in a patient's electronic health record
or other limits are placed on the portability of data sent from the
non-donated electronic health records system. According to these
commenters, the limited accessibility of the data makes it harder for
the physician recipient to access and use it for clinical purposes. As
a result, a physician recipient is more likely to utilize only the
donor's services to make sure that necessary data is easily accessible.
These commenters asserted that there are no technical solutions to
reducing the possibility of data lock-in; rather, the only solution is
to remove laboratory companies from the types of entities whose
donations may be protected under Sec. 411.357(w).
Several other commenters generally endorsed our efforts to prevent
data and referral lock-in. These commenters evidenced strong support
for the free exchange of health information across different provider
types to better coordinate care for patients. However, apart from
supporting our efforts to ensure that electronic health records systems
are interoperable, the commenters made no specific recommendations
regarding modifications to the exception.
Response: We share the commenters' concerns about the
interoperability of donated electronic health records software.
Arrangements involving the donation of electronic health records
software that has limited or restricted interoperability due to action
taken by the donor or by any person on the donor's behalf (which could
include the physician recipient acting on the donor's behalf) would
fail to satisfy the requirement at Sec. 411.357(w)(3) and would be
inconsistent with an important purpose of the exception, which is to
promote the use of technology that is able to communicate with products
from other vendors. For example, arrangements in which the donor takes
an action to limit the use,
[[Page 78763]]
communication, or interoperability of the electronic health records
items or services by entering into an agreement with the physician
recipient to preclude or inhibit any competitor from interfacing with
the donated items or services would not satisfy the requirement of
Sec. 411.357(w)(3). Other donation arrangements described by the
commenters in which electronic health records technology vendors charge
high interface fees to non-recipient providers or competitors may also
fail to satisfy the requirements of Sec. 411.357(w)(3). We believe
that any action taken by a donor (or any person on behalf of the donor,
including the electronic health records technology vendor or the
physician recipient) to limit the use of the donated electronic health
records items or services by charging fees to prevent non-recipient
providers and the donor's competitors from interfacing with the donated
items or services would pose legitimate concerns that parties were
improperly locking in data and referrals, and that the arrangement in
question would not satisfy the requirements of the exception. However,
whether a donation actually satisfies the requirements of the exception
depends on the specific facts of the donation arrangement.
Comment: One commenter expressed concern regarding data lock-in and
supported ensuring that donations of electronic health records items
and services are transparent and free of any attempts to steer future
business. Although it denied knowledge of any specific abuse of the
exception, the commenter requested that we allow individuals or
entities to remedy noncompliance with the physician self-referral law
due to a donation that may not be protected by the exception. The
commenter suggested that the remedy for violation of the physician
self-referral law due to an arrangement's failure to satisfy the
requirements of the exception at Sec. 411.357(w) should be to make
physician recipients pay the fair market value of any costs for ongoing
support of the donated electronic health records items or services. The
commenter suggested allowing 3 years for the physician recipient to
either pay full value for the donated electronic health records items
and services or transition to a new system.
Response: We appreciate the commenter's concern and recommendation;
however, we decline to make the suggested modification. Implementing
the commenter's suggestions would be outside the scope of our statutory
authority under section 1877(b)(4) of the Act to promulgate exceptions
to the physician self-referral law that pose no risk of program or
patient abuse.
Comment: A few commenters urged us to amend the exception to
require the physician recipient or the donor to participate in health
information exchange with an electronic health records system that is
different from the one donated. One commenter specifically suggested
that the physician recipient should have to demonstrate exchange with
at least one other electronic health records system within a certain
timeframe after receipt of the donation. Another commenter suggested
that the donor should have to--upon request--enable the physician
recipient of the donation to engage in bi-directional exchange of data
with competitors not using the same electronic health records system.
Response: We appreciate the commenters' recommendations; however,
we are not modifying the exception to require the parties to an
arrangement for the donation of electronic health records items and
services to demonstrate interoperation. We question whether adequate
demonstration of interoperation could occur only after the donation has
been made, which would create uncertainty about whether the donation
satisfies the requirements of the exception. This uncertainty would
undermine the Department's broad goal for the exception--that is, to
support widespread adoption of interoperable electronic health records
technology. However, it is our intent and expectation that
interoperation of donated items and services will, in fact, occur, and
we believe the requirements of the exception, in their entirety,
promote such interoperation. Moreover, routine interoperation with
systems other than those of the donor may be evidence that neither the
donor nor any person on the donor's behalf has taken 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, as required under Sec. 411.357(w)(3).
Further, we note that the Department is considering a number of
policies to accelerate and advance interoperability and health
information exchange. As part of this process, ONC and CMS issued a
notice requesting input from the public on possible policies and
programmatic changes to accelerate electronic health information
exchange among individuals and entities that furnish health care items
and services, as well as new ideas that would be both effective and
feasible to implement (78 FR 14793). We believe that the process
through which ONC and CMS will jointly act is better-suited than this
exception to consider and respond to evolving functionality related to
the interoperability of electronic health records technology. The paper
that addresses the public comments we received and outlines the
Department's strategy for accelerating health information exchange is
available at: http://www.healthit.gov/policy-researchers-implementers/accelerating-health-information-exchange-hie.
Comment: In response to our solicitation of comments, some
commenters provided suggestions as to how we could broaden the current
requirements related to data lock-in. Two commenters suggested amending
Sec. 411.357(w)(3), which prohibits the donor (or any person on the
donor's behalf) from taking 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.''
Specifically, the commenters suggested that we replace the reference to
``electronic prescribing or electronic health records systems'' with
``health information technology platforms or other health care
providers.'' The commenters asserted that this proposed change reflects
the development of health information technology that may not be
classified as an electronic health records system, but supports the
free exchange of health information. These two commenters also
suggested that we modify Sec. 411.357(w)(3) to state that neither the
donor nor the physician recipient may take any action to limit the
interoperability of donated electronic health records items or services
and that we require that the modified condition be included as part of
the written agreement required under Sec. 411.357(w)(7).
Another commenter suggested amending Sec. 411.357(w)(3) by
providing a non-exhaustive list of actions that would cause a donation
not to satisfy this requirement and by establishing a process for
entities to provide the Department with information about potential
abuses of the exception. A representative of several health plans
suggested modifying the exception to ensure that, in the context of
health information exchange, the interoperability requirement of the
exception requires that all key stakeholders, including health
insurance plans, have access to the health information exchange. The
commenter suggested that we modify the interoperability condition at 42
CFR 411.357(w)(2) to prohibit restrictions on the communication and
exchange of
[[Page 78764]]
data with any covered entity as defined at 45 CFR 160.103.
Response: The language in the existing regulatory text prohibits
donors (or persons on the donor's behalf) from taking any action to
limit or restrict the use, compatibility, or interoperability of
donated items or services with other ``electronic prescribing or
electronic health records systems.'' The term ``electronic prescribing
or electronic health records systems'' was intended to be broad in
order to account for developments in the health information technology
industry. Based on the commenters' suggestions it appears, however,
that stakeholders may have read this term more narrowly. This narrow
reading is inconsistent with our intended meaning. We have always
believed and continue to believe that an action taken by a donor (or on
behalf of the donor) that limits the use, compatibility, or
interoperability of donated items or services with any other health
information technology may impede the free exchange of data and limit
the ability of providers and suppliers to coordinate care, which is
inconsistent with the goals of the exception. Therefore, we are
clarifying 42 CFR 411.357(w)(3) by adding, by way of example and
without limitation, a non-exhaustive list of some of the forms of
technologies that we believe are included within the meaning of the
existing regulatory language. We are not adopting the commenters'
suggested edit, as we do not believe that it is necessary in light of
our clarification. We also decline to modify 42 CFR 411.357(w)(2) to
prohibit restrictions on the communication and exchange of data with
any covered entity as defined at 45 CFR 160.103. We believe that
existing 42 CFR 411.357(w)(3), which we have clarified in this final
rule as including health information technology applications, products,
or services, promotes interoperability with a variety of providers and
suppliers, as well as other health care entities that may play a role
in the coordination of care, including health plans that operate health
information technology applications, products, or services.
We are also not adopting the commenters' suggestion to modify the
exception to state that neither the donor nor the physician recipient
may take any action to limit the interoperability of donated electronic
health records items or services. The requirement at Sec.
411.357(w)(3) prohibits the donor (or any person on behalf of the
donor) from taking any action that limits or restricts the use,
compatibility, or interoperability of the donated electronic health
records items or services. To the extent that a physician recipient
takes an action on the donor's behalf to limit the use, compatibility,
or interoperability of donated items or services, that donation would
fail to qualify for protection under the exception. Because we see no
obvious reason, other than at the behest of the donor or as a condition
of the donation, why a physician recipient would take action to limit
the use, compatibility, or interoperability of donated items or
services, we believe that any action of this type by a physician
recipient would be suspect. We are not making the suggested
modification because we believe the concern articulated by the
commenters is already addressed by the existing regulatory language and
the policies we are adopting in this final rule. Accordingly, we are
not making any corresponding revisions to require that the recommended
provision be incorporated into the written agreement required under
Sec. 411.357(w)(7).
Finally, we are not revising the exception to provide in regulation
text examples of actions that may cause a donation not to satisfy the
requirements of Sec. 411.357(w)(3). Whether a donation satisfies the
requirements of the exception requires a case-by-case analysis and
depends on the specific facts of the donation.
Comment: One commenter objected to the use of the exception to
address the issue of data lock-in. The commenter contended that data
lock-in may arise in response to legitimate concerns, such as the
Health Insurance Portability and Accountability Act (HIPAA) privacy and
security rules, liability issues, licensing requirements, and antitrust
issues. Further, according to the commenter, data lock-in conditions
may cause uncertainty for donors because parties may not be able to
determine whether a donation satisfies the requirements of the
exception until after donation.
Response: Nothing in this final rule is intended to prohibit
legitimate actions taken to ensure that electronic health records items
and services appropriately protect data, including measures to ensure
the privacy and security of health information data. We recognize that
there may be appropriate security, privacy and other business reasons
to protect data. This final rule addresses only actions that
inappropriately lock in data, for example, locking in data to secure
future referrals.
Comment: One commenter expressed support for preventing electronic
health records data lock-in and the free exchange of data. However, the
commenter did not agree that additional requirements designed to
promote these goals would be effective. Instead, the commenter
suggested that we adopt payment models that continue to foster care
coordination activities.
Response: We appreciate the commenter's suggestion; however,
changes to our payment models are outside the scope of the proposed
rule. We note that, in our joint Request for Information, we and ONC
solicited input on options for improving several different CMS payment
models to support better the adoption of interoperable electronic
health records technology (78 FR 14797). As noted earlier, the paper
that addresses the public comments we received and outlines the
Department's strategy for accelerating health information exchange is
available at: http://www.healthit.gov/policy-researchers-implementers/accelerating-health-information-exchange-hie.
Comment: Two commenters suggested data lock-in could be limited by
requiring electronic health records software to be open or ``open
source.'' Both commenters asserted that open source software would
limit data lock-in due to the transparent nature of open source
software. In addition, it would lead to greater interoperability of
electronic health records systems. One commenter also suggested that we
require mandatory advance disclosure of the operational and business
policies and practices associated with the electronic health records
technologies. One commenter suggested that we adopt the e-DOS standard
as certification criteria for electronic health records.
Response: Although we share the commenters' support for the free
exchange of health information where appropriate protections for
privacy and security exist, we are not adopting their recommendations
because software certification criteria and standards are determined by
ONC and are, therefore, outside the scope of this rulemaking.
3. Covered Technology
In the proposed rule, we noted that we received questions
concerning whether certain items or services fall within the scope of
the technology potentially covered under the exception at Sec.
411.357(w). There, we stated that the answer to such questions depends
on the exact items or services being donated. We referenced our
discussion in the August 2006 final rule regarding our interpretation
of the term ``software, information technology and training services
necessary and used predominantly.'' We stated that we believe that the
current regulatory text, when read in light of the preamble discussion,
is sufficiently clear concerning the scope of covered
[[Page 78765]]
technology. Nonetheless, because we received suggestions from
stakeholders to modify Sec. 411.357(w) to reflect explicitly this
interpretation, in the proposed rule (78 FR 21313), we sought comments
from the public regarding this issue. After considering the public
comments with respect to this issue, we determined not to make any
changes to the regulation text to address the scope of covered
technology.
Comment: Several commenters stated that the regulatory text
describing the scope of technology covered by the exception, when read
in light of the August 2006 final rule preamble, is sufficiently clear.
One of these commenters urged us not to revise the regulation in any
way that might limit the scope of covered technology, limit the ability
of donors and physician recipients in the design and selection of items
and services, or create barriers to achieving interoperability. Other
commenters agreed that the current definition of covered technology is
appropriate, with two of these commenters suggesting that we revisit
the definition in the future as health information technology evolves.
Still other commenters asserted that the existing regulatory language
can be interpreted to include ``services that enable the interoperable
exchange of electronic health records data;'' thus, no revisions to the
regulatory text are required. In contrast, one commenter suggested that
we incorporate into the regulatory text the preamble language from the
August 2006 final rule where we discussed examples of items and
services that would qualify for coverage under the exception. Another
commenter suggested that we revise the regulatory text to include as
many examples of covered ``software, information technology and
training services'' as possible while emphasizing that the list is not
exhaustive.
Response: We agree that maintaining flexibility is important,
particularly as health information technology evolves. We endeavor to
avoid revisions to the regulation text that could inadvertently narrow
the exception, which is intended to promote the adoption of
interoperable electronic health records technology. Moreover, our
interpretation of what is covered by the exception has not changed. As
we stated in the proposed rule (78 FR 21313), whether specific items or
services fall within the scope of covered technology under the
exception depends on the exact items or services that are being
donated. If the ``services that enable the interoperable exchange of
electronic health records data'' are of the type that do not meet the
requirements for covered technology (for example, because they include
hardware, storage devices, or have core functionality other than
electronic health records), they would not be eligible for protection
under the exception at Sec. 411.357(w).
For these reasons, we are not revising the regulation text at Sec.
411.357(w) to identify any specific types of items or services that may
be donated if the other requirements of the exception are satisfied. We
are also not modifying the examples identified in the preamble
discussion in the August 2006 final rule (71 FR 45151). The exception
continues to protect nonmonetary remuneration in the form of software,
information technology and training services necessary and used
predominantly to create, maintain, transmit, or receive electronic
health records.
Comment: A few commenters requested clarification regarding whether
third-party fees related to the exchange of health information, such as
health information exchange service charges for interconnectivity, are
``covered technologies'' under the exception.
Response: The exception protects only nonmonetary remuneration, in
the form of software and information technology and training services,
that is necessary and used predominantly to create, maintain, transmit,
or receive electronic health records. Whether particular items or
services, such as interconnectivity services, may be donated under the
exception depends on the exact items or services being donated.
Comment: One commenter suggested that, in addition to maintaining
as much flexibility as possible, we broaden the scope of the technology
covered by the exception to include software and services used for care
coordination, quality measurement, improving population health, or
improving the quality or efficiency of health care delivery among
parties. The commenter noted that some of these items may be covered by
the waivers issued in connection with the Medicare Shared Savings
Program (MSSP); however, because those waivers extend only to parties
participating in that program, protection for the donation of items or
services that advance the Department's goal of encouraging the adoption
of health information technology that supports public policy objectives
is not available to other health care industry stakeholders. To advance
these goals in a broader way, the commenter suggested that the
exception be expanded to include items potentially covered by the MSSP
pre-participation waiver, such as electronic health information
exchanges that allow for electronic data exchange across multiple
platforms, data reporting systems (including all-payer claims data
reporting systems), and data analytics (including staff and systems,
such as software tools, to perform analytic functions). Another
commenter suggested that we broaden the scope of technology covered by
the exception to include software separate from the certified
electronic health records software as long as it is interoperable with
the electronic health records software. The commenter gave as examples
of such electronic health records-associated components ``patient
portals that support patient engagement, direct and other standards-
compliant means for secure patient information exchange between
providers, solutions to support transition care, and tools that may
assist in inter- and intra-patient matching.'' A third commenter urged
us to consider a broader array of covered technologies, provided that
they support policy goals such as reducing hospital readmissions and
coordinated care across settings outside of traditional office
settings, including telemonitoring and telemedicine. Another commenter
suggested that we expand the protection of the exception to cover ``any
additional items or services that will be required or helpful in
meeting Stage 2 or Stage 3 requirements for [the EHR Incentive
Programs].''
Response: As stated previously, whether specific items or services
fall within the scope of covered technology under the exception at
Sec. 411.357(w) depends on the exact items or services that are being
donated. Some of the particular items and services that may be included
within the broad categories identified by the commenters may be
eligible for donation. For example, if a particular software product
related to transitions of care was necessary and used predominantly to
create, maintain, transmit, or receive electronic health records, then
it would be eligible for donation, provided that the donation satisfied
all of the other requirements of the exception. As noted previously in
this final rule, software is not required to be certified to ONC
certification criteria in order to be donated under the exception at
Sec. 411.357(w). Thus, software that is separate from certified
software may still be eligible for donation if it satisfies the
definition of ``interoperable'' at Sec. 411.351.
To the extent that the commenters suggested that we expand the
scope of the exception to protect items and services that are not
already eligible for donation, we note that revision of the exception
to include such items or services would be outside the scope of
[[Page 78766]]
this rulemaking. In the proposed rule (78 FR 21313), with respect to
the scope of technology potentially covered by the exception, we sought
input from the public regarding the singular issue of ``whether the
current regulatory text, when read in light of the preamble discussion,
is sufficiently clear concerning the scope of covered technology.''
With regard to whether the scope of the technology covered under the
exception should be broadened--as opposed to clarified--we are mindful
of the important issues raised by the commenters and may consider them
in the future. Further, we note that other exceptions to the physician
self-referral law exist to protect financial relationships between
physicians and entities furnishing DHS. Depending on the circumstances,
some of the arrangements described by the commenters may satisfy the
requirements of another exception or may not implicate the physician
self-referral law.
Comment: One commenter suggested that we define ``equivalent
technology'' for purposes of the requirement in the exception that the
donor of electronic health records items or services may not have
actual knowledge of, or act in reckless disregard or deliberate
ignorance of, the fact that the physician recipient possesses or has
obtained items or services equivalent to those being donated. This
commenter also suggested that we prohibit a physician from seeking or
accepting a donation of electronic health records technology before a
certain period of time has elapsed since the receipt of a previous
donation. Another commenter urged us to eliminate maintenance and
service agreements from the scope of potentially protected donations
under the exception. In the alternative, the commenter suggested that
we impose a restriction on the time period that donations of such
services would be permitted. The commenter noted concerns that donors
may use ongoing donations of maintenance and service agreements to lock
in referrals from physician recipients. A commenter that urged us not
to extend the availability of the exception suggested that we prohibit
the donation of all technology except interfaces for reporting of
laboratory results.
Response: Although we appreciate the commenters' suggestions, we
are not making the requested changes. We believe that the modifications
to and clarifications of Sec. 411.357(w) adopted in this final rule
and the clarifications offered in this preamble address the concerns
raised by these commenters.
Comment: One commenter asserted that the prohibition on donating
equivalent items or services currently included in the exception locks
physician practices into a vendor, even if they are dissatisfied with
the technology, because the physician recipient must choose between
paying the full amount for a new system and continuing to pay 15
percent of the cost of the substandard system. The commenter asserted
that the cost differential between these two options is too high and
effectively locks physician practices into electronic health records
technology vendors.
Response: Although we appreciate the commenter's concern, we
continue to believe that items and services are not ``necessary'' if
the physician recipient already possesses equivalent items or services.
As we stated in the August 2006 final rule (71 FR 45154), ``the
provision of equivalent items and services poses a heightened risk of
abuse, [because] such arrangements potentially confer independent value
on the physician recipient (that is, the value of the existing items
and services that might be put to other uses) unrelated to the need for
electronic health records technology.'' Therefore, we are retaining the
regulatory preclusion of protection for donation arrangements where the
donor has actual knowledge of, or acts in reckless disregard or
deliberate ignorance of, the fact that the physician recipient
possesses or has obtained equivalent items or services. We expect that
physicians would not select or continue to use a substandard system if
it posed a threat to patient safety.
Comment: One commenter referenced the proposed rule's statement
that ``software or information technology and training services
necessary and used predominantly for electronic health records
purposes'' included ``information services related to patient care (but
not separate research or marketing support services)'' (78 FR 21313).
The commenter requested that we retract that statement and clarify that
it is appropriate for health researchers to use data in electronic
health records for research that is related to, for example, evidence-
based medicine, population management, or other research, provided that
the use complies with applicable Federal, state, and institutional
requirements.
Response: We decline to retract our statement in the proposed rule.
To promote adoption of electronic health records without risk of abuse,
the scope of items and services permitted to be donated under the
exception is limited to electronic health records items and services in
the form of software and information technology and training services
that are ``necessary and used predominantly to create, maintain,
transmit, or receive electronic health records.'' Donations of software
used for research that is separate from clinical support and
information services related to patient care are not consistent with
the primary goals of the exception.
The exception at Sec. 411.357(w) addresses only the donation of
electronic health records items and services, and not the use of data.
Thus, the portion of the comment related to data use is outside the
scope of this rulemaking. We note, however, that nothing in the
exception prohibits the use of data in electronic health records
systems for research purposes (assuming the parties comply with all
other applicable laws, including HIPAA privacy protections).
Comment: One commenter requested that CMS confirm that patient
portals are within the scope of the technology potentially protected by
the exception.
Response: We are not certain what the commenter precisely means by
``patient portals.'' Patient portals come in a variety of forms; the
key to the analysis is whether the specific item or service donated is:
(1) In the form of software, information technology and training
services and; (2) necessary and used predominantly to create, maintain,
transmit or receive electronic health records. As we stated in the
August 2006 final rule in response to a commenter's recommendation that
the exception specifically protect the provision of patient portal
software that enables patients to maintain on-line personal medical
records, including scheduling functions (71 FR 45152), nothing in the
exception precludes protection for patient portal software if it
satisfies all of the requirements of the exception.
E. Comments Outside the Scope of This Rulemaking
In addition to the comments described and to which we responded
previously, we received several comments from stakeholders, including
suggestions on policy changes, that are outside the scope of this
rulemaking. For example, one commenter raised concerns about a private
insurer's proposed fee schedule for laboratory services. Another
commenter expressed concern about ``outrageous bills'' the commenter
received from a laboratory company. Although we appreciate the
commenters taking the time to present these concerns, we do not address
them here, as they are outside the scope of this rulemaking.
[[Page 78767]]
IV. Provisions of the Final Regulations
For the most part, this final rule incorporates the proposed
revisions stated in the proposed rule. Specifically, we are revising
the exception to exclude laboratory companies from the types of
entities that may donate electronic health records items and services
under the exception, and are modifying the regulation text at Sec.
411.357(w)(1) to effectuate this change. We are also amending Sec.
411.357(w)(2) by deleting the phrase ``recognized by the Secretary''
and by replacing it with the phrase ``authorized by the National
Coordinator for Health Information Technology'' and replacing the 12-
month timeframe for certification of electronic health records software
with a requirement that the software be certified to an edition of the
electronic health record certification criteria identified in the then-
applicable version of 45 CFR part 170 (ONC's certification program). We
are clarifying the requirement at Sec. 411.357(w)(3) prohibiting any
action that limits or restricts the use, compatibility, or
interoperability of donated items or services. In addition, we are
eliminating the requirement at Sec. 411.357(w)(11) that donated
electronic health records software include electronic prescribing
capability. Finally, we are modifying Sec. 411.357(w)(13) to extend
the expiration of the exception from December 31, 2013 to December 31,
2021.
V. Waiver of the Delay in the Effective Date
Ordinarily, we provide a delay of at least 30 days in the effective
date of a final rule after the date that the rule is issued. However,
the 30-day delay in effective date can be waived if the rule grants or
recognizes an exemption or relieves a restriction. We believe that it
is appropriate to waive the 30-day delay in effective date for Sec.
411.357(w)(13), which relieves a restriction on donations of electronic
health records items and services. Specifically, this final rule amends
Sec. 411.357(w)(13) to extend the expiration of the existing exception
from December 31, 2013 to December 31, 2021. Without a waiver of the
requirement for a delayed effective date, the entire exception will
expire on December 31, 2013 and will not be available to protect any
ongoing donation arrangements or new donations of electronic health
records items and services made to physicians after December 31, 2013.
By waiving the 30-day delay in effective date, the exception will not
expire, thereby allowing parties to continue utilizing the exception to
protect donations of electronic health records items and services. We
stress, however, that donations of electronic health records items and
services that occur between January 1, 2014 and the effective date of
the remaining provisions of this final rule (March 27, 2014) will need
to satisfy all of the requirements of the existing exception. The
waiver of the 30-day delay in effective date simply serves to maintain
the status quo until the rest of this final rule becomes effective.
The 30-day delay in effective date can also be waived if the agency
finds for good cause that the delay is impracticable, unnecessary, or
contrary to the public interest, and the agency incorporates a
statement of the findings and reasons in the rule issued. We find that
it is unnecessary to provide a 30-day delay in effective date for Sec.
411.357(w)(13) because an earlier effective date simply allows parties
to continue making donations under the existing electronic health
records items and services exception; it does not impose any new
requirements or restrictions on potentially affected parties. Moreover,
we find that a 30-day delayed effective date for Sec. 411.357(w)(13)
is impracticable because it would cause the entire exception to expire,
thereby nullifying this final rule.
VI. Collection of Information Requirements
The provisions in this final rule will not impose any new or
revised information collection, recordkeeping, or disclosure
requirements. Consequently, this rule does not need additional Office
of Management and Budget review under the authority of the Paperwork
Reduction Act of 1995.
VII. Regulatory Impact Analysis
We have examined the impact of this rule as required by Executive
Order 12866 on Regulatory Planning and Review (September 30, 1993),
Executive Order 13563 on Improving Regulation and Regulatory Review
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19,
1980, Pub. L. 96-354), section 1102(b) of the Act, section 202 of the
Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4),
Executive Order 13132 on Federalism (August 4, 1999), and the
Congressional Review Act (5 U.S.C. 804(2)).
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). A
regulatory impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million or more in any 1 year).
We believe that this final rule does not reach the economic threshold
for being considered economically significant and, thus, is not
considered a major rule. It is not economically significant because it
will not have a significant effect on program expenditures, and there
are no additional substantive costs to implement the resulting
provisions. The rule modifies an existing exception to the physician
self-referral law, and the modifications would not impose additional
substantive costs on those seeking to utilize the exception. Further,
the donation of electronic health records items or services and the use
of the exception to protect such donations is entirely voluntary. In
section III. of this final rule, we provide a detailed discussion and
analysis of the alternatives considered in this final rule, including
those considered for extending the expiration date of the electronic
health records exception, limiting the types of entities that may
donate electronic health records items and services, and tying the
timeframe for deeming electronic health records software to ONC's
certification program. Finally, we received no public comments specific
to the RIA set forth in the proposed rule.
This final rule extends the exception's expiration date to December
31, 2021; excludes laboratory companies from the types of entities that
may donate electronic health records items and services; updates the
provision under which electronic health records software is deemed
interoperable; clarifies the requirement at Sec. 411.357(w)(3)
prohibiting any action that limits or restricts the use, compatibility,
or interoperability of donated items or services; and removes the
requirement related to electronic prescribing capability. Neither this
final rule nor the regulations it amends requires any entity to donate
electronic health records items and services to physicians, but we
expect these changes to continue to facilitate the adoption of
electronic health records technology by eliminating perceived barriers
rather than creating the primary means by which physicians would adopt
this technology.
The summation of the economic impact analysis regarding the effects
of electronic health records in the ambulatory setting that is
presented in
[[Page 78768]]
the August 2006 final rule (71 FR 45164) still pertains to this final
rule. However, since the August 2006 final rule, several developments
have occurred to make us conclude that it is no longer necessary to
retain a requirement related to electronic prescribing capability in
the electronic health records exception. These developments include the
passage of two laws encouraging adoption of electronic prescribing and
electronic health records: (1) the Medicare Improvements for Patients
and Providers Act of 2008 (MIPPA), Public Law 110-275; and (2) the
Health Information Technology for Economic and Clinical Health (HITECH)
Act, Title XIII of Division A and Title IV of Division B of the
American Recovery and Reinvestment Act of 2009 (ARRA), Pub. L. 111-5.
In addition, there has been an increase over the past few years in the
rate of electronic health records-based electronic prescribing
capabilities.\3\
---------------------------------------------------------------------------
\3\ See, for example, State Variation in E-Prescribing Trends in
the United States, available at http://www.healthit.gov/sites/default/files/us_e-prescribingtrends_onc_brief_4_nov2012.pdf.
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As discussed in more detail in the preamble to the proposed rule,
section 132 of MIPPA authorized an electronic prescribing incentive
program (starting in 2009) for certain types of eligible professionals.
The HITECH Act authorized us to establish the EHR Incentive Programs
for certain eligible professionals, eligible hospitals, and critical
access hospitals. Also, the HITECH Act required that eligible
professionals under the EHR Incentive Programs demonstrate meaningful
use of certified electronic health records technology, including the
use of electronic prescribing. Specifically, the final rule for Stage 2
EHR Incentive Programs (September 4, 2012; 77 FR 53968) includes more
demanding requirements for electronic prescribing and identifies
electronic prescribing as a required core measure. As a result,
beginning in calendar year 2015, an eligible professional risks a
reduction in the Medicare Physician Fee Schedule payment amount that
will otherwise apply for covered professional services if he or she is
not a meaningful electronic health records technology user for a
reporting period during that year. Our intent remains to allow
physicians not to receive products or services they already own, but
rather to receive electronic health records items and services that
advance the adoption and use of electronic health records. Lastly,
according to ONC, electronic prescribing by physicians using electronic
health records technology has increased from 7 percent in December 2008
to approximately 48 percent in June 2012.\4\ Furthermore, the rules
recently published to implement Stage 2 of the EHR Incentive Programs
(77 FR 54198 and 77 FR 53989), continue to encourage physicians' use of
electronic prescribing technology. However, due to data limitations, we
are unable to estimate accurately how much the electronic health
records exception has contributed to the increase in electronic
prescribing. Nevertheless, we believe that, as a result of recent
developments, physician adoption of electronic prescribing and
electronic health records technology will continue to increase despite
removal of the electronic prescribing capability requirement in the
electronic health records exception.
---------------------------------------------------------------------------
\4\ See, for example, State Variation in E-Prescribing Trends in
the United States, available at http://www.healthit.gov/sites/default/files/us_e-prescribingtrends_onc_brief_4_nov2012.pdf.
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The RFA requires agencies to analyze options for regulatory relief
of small entities, if a rule has a significant impact on a substantial
number of small entities. For purposes of the RFA, small entities
include small businesses, nonprofit organizations, and small
governmental jurisdictions. Most hospitals and most other providers and
suppliers are small entities, either by nonprofit status or by having
revenues of less than $7.0 million to less than $35.5 million in any 1
year. Individuals and States are not included in the definition of a
small entity. This final rule does not result in an economic effect on
small entities of 3 to 5 percent or more of their total revenues or
costs. As a result, the Secretary has determined that this final rule
will not have a significant economic impact on a substantial number of
small entities.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact on
the operations of a substantial number of small rural hospitals. This
analysis must conform to the provisions of section 604 of the RFA. For
purposes of section 1102(b) of the Act, we define a small rural
hospital as a hospital that is located outside of a Metropolitan
Statistical Area for Medicare payment regulations and has fewer than
100 beds. The Secretary has determined that this final rule would not
have a significant economic impact on the operations of a substantial
number of small rural hospitals (that is, an effect of more than 3 to 5
percent of their total revenues or costs).
Section 202 of the Unfunded Mandates Reform Act of 1995 requires
that agencies assess anticipated costs and benefits before issuing any
rule whose mandates require spending in any 1 year of $100 million in
1995 dollars, updated annually for inflation. In 2013, that threshold
is approximately $141 million. This final rule imposes no mandates and,
as a result, will have no consequential effect on State, local, or
tribal governments, or on the private sector, of $141 million or more.
Executive Order 13132 establishes certain requirements that an
agency must meet when it issues a final rule that imposes substantial
direct requirement costs on State and local governments, preempts State
law, or otherwise has Federalism implications. For the reasons stated
earlier, this final rule will not have a substantial effect on State or
local governments, nor does it preempt State law or have Federalism
implications.
In accordance with the provisions of Executive Order 12866, this
rule was reviewed by the Office of Management and Budget.
List of Subjects for 42 CFR Part 411
Kidney diseases, Medicare, Physician referral, Reporting and
recordkeeping requirements.
For the reasons set forth in the preamble, the Centers for Medicare
& Medicaid Services amends 42 CFR part 411 as set forth below:
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE
PAYMENT
0
1. The authority citation for part 411 continues to read as follows:
Authority: Secs. 1102, 1860D-1 through 1860D-42, 1871, and 1877
of the Social Security Act (42 U.S.C. 1302, 1395w-101 through 1395w-
152, 1395hh, and 1395nn).
0
2. Section 411.357 is amended as follows:
0
A. Revising paragraphs (w)(1) through (3).
0
B. Removing and reserving paragraph (w)(11).
0
C. In paragraph (w)(13), removing the date ``December 31, 2013'' and
adding the date ``December 31, 2021'' in its place.
The revision reads as follows:
Sec. 411.357 Exceptions to the referral prohibition related to
compensation arrangements.
* * * * *
(w) * * *
(1) The items and services are provided to a physician by an entity
(as defined at Sec. 411.351) that is not a laboratory company.
[[Page 78769]]
(2) The software is interoperable (as defined in Sec. 411.351) at
the time it is provided to the physician. For purposes of this
paragraph, software is deemed to be interoperable if, on the date it is
provided to the physician, it has been certified by a certifying body
authorized by the National Coordinator for Health Information
Technology to an edition of the electronic health record certification
criteria identified in the then-applicable version of 45 CFR part 170.
(3) The donor (or any person on the donor's behalf) 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 (including, but not
limited to, health information technology applications, products, or
services).
* * * * *
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital Insurance; and Program No. 93.774, Medicare--
Supplementary Medical Insurance Program)
Dated: September 5, 2013.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Approved: December 12, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-30923 Filed 12-23-13; 4:15 pm]
BILLING CODE 4120-01-P