Medicare Program; Physicians' Referrals to Health Care Entities With Which They Have Financial Relationships: Exception for Certain Electronic Health Records Arrangements
CFR Part: "42 CFR Part 411"
RIN Number: "RIN 0938-AR70"
Citation: "78 FR 78751"
Document Number: "CMS-1454-F"
"Rules and Regulations"
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
DATES: With the exception of the amendment to
FOR FURTHER INFORMATION CONTACT:
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
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
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
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.
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
B. The Electronic Health Records Items and Services Exception
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
Elsewhere in this issue of the
FOOTNOTE 1 42 CFR 1001.952(y). END FOOTNOTE
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
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
After consideration of the public comments received, we are finalizing the proposed revisions to
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
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
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
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
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
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
FOOTNOTE 2 ONC has recently begun characterizing sets of adopted certification criteria as "editions." END FOOTNOTE
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
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
We continue to believe in the critical importance of electronic prescribing. However, in light of developments since the
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
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
C. The "Sunset" Provision
Protected donations under the current electronic health records exception must be made on or prior to
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
Comment: Numerous commenters urged us to make permanent the exception at
Response: We agree with the commenters that the continued availability of the exception at
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
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
Comment: Two commenters agreed that the availability of the exception at
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
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
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
Comment: A number of commenters urged us to let the exception at
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
Comment: Numerous commenters suggested that the exception at
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
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
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
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
Comment: Many commenters noted that several states--including
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 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
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
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
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 (
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 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
We are also clarifying that, if a hospital furnishes clinical laboratory services through a laboratory that is a department of the hospital for
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
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
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,
Comment: Two commenters raised issues regarding the type of remuneration permissible under the exception at
Response: We remind stakeholders that the exception at
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
Some commenters, while acknowledging our concerns regarding abusive donation practices, suggested 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
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
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
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 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-a-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
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
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
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
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
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
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
Another commenter suggested amending
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
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
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
Comment: Several commenters stated that the regulatory text describing the scope of technology covered by the exception, when read in light of the
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
For these reasons, we are not revising the regulation text at
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
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 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
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
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
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
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.
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
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
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
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
VII. Regulatory Impact Analysis
We have examined the impact of this rule as required by Executive Order 12866 on Regulatory Planning and Review (
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 (
This final rule extends the exception's expiration date to
The summation of the economic impact analysis regarding the effects of electronic health records in the ambulatory setting that is presented in the
FOOTNOTE 3 See, for example, State Variation in E-Prescribing Trends in
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 (
FOOTNOTE 4 See, for example, State Variation in E-Prescribing Trends in
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
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
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
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
List of Subjects for 42 CFR Part 411
For the reasons set forth in the preamble, the
PART 411--EXCLUSIONS FROM MEDICARE AND LIMITATIONS ON MEDICARE PAYMENT
1. The authority citation for part 411 continues to read as follows:
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).
2. Section 411.357 is amended as follows:
A. Revising paragraphs (w)(1) through (3).
B. Removing and reserving paragraph (w)(11).
C. In paragraph (w)(13), removing the date "
The revision reads as follows:
* * * * *
(w) * * *
(1) The items and services are provided to a physician by an entity (as defined at
(2) The software is interoperable (as defined in
(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--
[FR Doc. 2013-30923 Filed 12-23-13;
BILLING CODE 4120-01-P
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